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Item 8. Financial Statements and Supplementary Data

2023-03-28 compared with 2022-03-31 · 336 added, 383 removed, 949 unchanged (43% of the section changed)

11 unchanged sentences

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of nCino, Inc.

(the Company) as of January 31, 2021 and 2022, the related consolidated statements of operations, comprehensive loss, changes in stockholders' equity and cash flows for each of the three years in the period ended January 31, 2022, and the related notes, as well as the financial statement schedule listed in the Index at Item 15.2.

We have audited the consolidated balance sheets of nCino, Inc.

(the Company) as of January 31, 2022 and 2023, the related consolidated statements of operations, comprehensive loss, stockholders' equity and cash flows for each of the three years in the period ended January 31, 2023, and the related notes, as well as the financial statement schedule listed in the Index at Item 15.2.

(collectively referred to as the “consolidated financial statements”).

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue Recognition

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The transaction price is allocated to the separate performance obligations on a relative standalone selling price (“SSP”) basis.

Auditing the Company’s accounting for revenue recognition was challenging given the considerations required to evaluate the terms and conditions in the customer contracts and to identify distinct performance obligations, and the estimation of the standalone selling price (SSP) of each performance obligation which is based in part on customer pricing, customer demographic and geographic area where services are sold.

The combination of these factors resulted in a significant level of audit effort.

The audit effort in evaluating the Company’s accounting for revenue recognition was extensive and required auditor judgment for certain customer contracts to evaluate the terms and conditions, identify distinct performance obligations and support the estimation of the standalone selling price (SSP) of each performance obligation which is based in part on customer pricing, customer demographic and geographic area where services are sold.

How We Addressed

the Matter in Our

Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s revenue recognition process, including controls designed to mitigate the risk of override of controls.

Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s revenue recognition processes, including controls designed to mitigate the risk of override of controls.

This included testing controls over management’s review of customer contracts and review of manual revenue journal entries.

To test the Company’s accounting for revenue recognition, we performed audit procedures that included, among others, data analytics to validate that the revenue recorded correlated to the deferred revenue and accounts receivable amounts and the accounts receivable amounts ultimately settled in cash.

Our audit procedures also included selecting a sample of revenue transactions and evaluating contract terms and conditions in accordance with ASC 606.

This testing included reperforming the Company’s allocation of transaction price to the respective performance obligations, testing management’s SSP assumptions and calculations, as well as testing the mathematical accuracy and underlying data including its completeness, used in the calculations.

Our audit procedures also included testing a sample of revenue transactions for each of the significant service offerings.

For the samples selected, we evaluated terms and conditions, reperformed management’s assessment of distinct performance obligations and allocation of consideration within the arrangement as well as tested the application of the revenue recognition accounting requirements, including reperforming calculations of revenue recognized and testing the underlying data used in the calculations.

We also assessed the appropriateness of the related disclosures in the consolidated financial statements.

Business Combination

Description of the

Matter As explained in Note 7 to the consolidated financial statements, on January 7, 2022 through a series of mergers, the Company completed the acquisition of SimpleNexus, LLC (“SimpleNexus”) for total purchase consideration of approximately $933.0 million.

The acquisition was accounted for as a business combination.

The Company recorded intangible assets from this acquisition, including customer relationships and developed technology of $70.0 million and $77.5 million respectively.

The Company used the multi-period excess earning method to estimate the fair value of the customer relationships and the relief from royalty method to estimate the fair value of the developed technology, each of which are based on management’s estimates and assumptions.

Auditing the Company's accounting for its acquisition of SimpleNexus was complex and subjective due to the significant estimation uncertainty in determining the fair value of the above mentioned identified intangible assets, which was primarily due to the sensitivity of the respective fair values to the underlying assumptions.

The significant assumptions used in the fair value estimate of the customer relationships intangible asset included the forecasted customer revenues, attrition rate, and discount rate.

The significant assumptions used in the fair value estimate of the developed technology intangible asset included forecasted revenues, obsolescence life and factor, and the discount rate.

Certain of these significant assumptions for each of the identified intangible assets are forward-looking and could be affected by future economic and market conditions.

How We Addressed

the Matter in Our

Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the estimation process supporting the recognition and measurement of customer relationships and developed technologies, including consideration of any measurement period adjustments.

Our tests included controls over the estimation process and valuation models to estimate the fair values of the above identified intangible assets, as well as controls over management’s review of the valuation methodologies and significant assumptions discussed above.

To test the estimated fair values of the customer relationship and developed technology intangible assets, we performed, with the assistance of our valuation specialists, audit procedures that included evaluating the Company's selection of the valuation methodologies, testing the significant assumptions, and testing the completeness and accuracy of the underlying data.

For example, we compared the significant assumptions in the prospective financial information, including the forecasted revenue growth rates, to current industry and market trends, as well as to the historical performance of the acquired business.

We also tested the underlying source information used in the valuation model including the determination of the discount rates and the mathematical accuracy of the calculations as well as independently calculated the fair value estimates to compare to the Company's recorded amounts.

/s/ Ernst & Young LLP

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(the Company) maintained, in all material respects, effective internal control over financial reporting as of January 31, 2023, based on the COSO criteria.

As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of SimpleNexus, LLC, acquired on January 7, 2022, which is included in the fiscal 2022 consolidated financial statements of the Company and accounted for approximately 1.3% of total assets as of January 31, 2022 and 1.4% of revenues and 7.3% of net loss for the fiscal year ended January 31, 2022.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of SimpleNexus, LLC.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets as of January 31, 2022 and 2023, the related consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for each of the three years in the period ended January 31, 2023, and the related notes, as well as the financial statement schedule listed in the Index at Item 15.2., and our report dated March 28, 2023 expressed an unqualified opinion thereon.

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$ 88,014 $ 82,036

Accounts receivable, less allowance for doubtful accounts of $ 88 and $ 151 at January 31, 2021 and January 31, 2022, respectively

Accounts receivable, less allowances of $ 151 and $ 899 at January 31, 2022 and January 31, 2023, respectively

74,528 99,497

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Intangible assets, net 180,122 152,825

Investment — 4,031

Investments (related party $ 0 and $ 2,500 at January 31, 2022 and January 31, 2023, respectively)

Other long-term assets 1,615 8,101

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Accounts payable $ 11,366 $ 11,878

Accounts payable, related party 1

Accrued compensation and benefits 21,454 22,623

Accrued expenses and other current liabilities 14,744 10,897

Deferred rent, current portion 203 —

Deferred revenue, current portion 122,643 154,871

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Deferred income taxes, noncurrent 1,675 2,797

Deferred rent, noncurrent 1,486 —

Deferred revenue, noncurrent 44 —

Revolving credit facility, noncurrent — 30,000

Financing obligations, noncurrent 33,478 54,365

1 unchanged sentence

Total liabilities 230,507 299,602

Commitments and contingencies (Notes 9, 15, 16 and 18)

Commitments and contingencies (Note 16)

Redeemable non-controlling interest (Note 3)

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Total liabilities, redeemable non-controlling interest, and stockholders’ equity $ 1,301,014 $ 1,327,269

$ 563,401 $ 1,301,014

1 See Note 16 "Related-Party Transactions".

The accompanying notes are an integral part of these consolidated financial statements .

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Net loss attributable to redeemable non-controlling interest (Note 3)

( 1,130 ) ( 1,569 ) ( 1,119 )

Adjustment attributable to redeemable non-controlling interest (Note 3)

396 894 1,995

Net loss attributable to nCino, Inc.

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Balance, January 31, 2020 — $ — 75,596,007 $ 38 5,931,319 $ 3 $ 288,564 $ ( 408 ) $ ( 120,924 ) $ 167,273

Cumulative-effect adjustment from adoption of accounting standard

— — — — — — — — 11,422 11,422

Stock issuance, net of issuance costs of $ 52

— — 3,448,276 2 229,885 — 79,946 — — 79,948

Stock issuance related to business combinations

— — 1,502,772 1 — — 25,203 — — 25,204

Contingent consideration related to business combinations — — — — — — 5,857 — — 5,857

Exercise of stock options — — 458,770 — ( 1 ) — 1,042 — — 1,042

Stock-based compensation — — — — — — 5,745 — — 5,745

Other comprehensive loss — — — — — — — ( 387 ) — ( 387 )

Net loss attributable to nCino, Inc.

— — — — — — — ( 27,594 ) ( 27,594 )

Balance, January 31, 2020 — — 75,596,007 38 5,931,319 3 288,564 ( 408 ) ( 120,924 ) 167,273

Issuance of common stock in connection with initial public offering, net of underwriting discounts and commissions 9,269,000 5 — — — — 268,370 — — 268,375

9,269,000 5 — — — — 268,370 — — 268,375

Costs in connection with initial public offering — — — — — — ( 4,534 ) — — ( 4,534 )

— — — — — ( 4,534 ) — — ( 4,534 )

Exercise of stock options 1,983,169 1 325,530 — — — 8,744 — — 8,745

Reclassification of voting and non-voting common stock 81,852,856 41 ( 75,921,537 ) ( 38 ) ( 5,931,319 ) ( 3 ) — — — —

81,852,856 41 ( 75,921,537 ) ( 38 ) ( 5,931,319 ) ( 3 ) — — — —

Stock issuance upon vesting of restricted stock units 253,042 — — — — — — — — —

Stock issuance for contingent consideration 285,692 — — — — — — — — —

Stock issuance of contingent consideration 285,692 — — — — — — — — —

Stock-based compensation — — — — — — 25,208 — — 25,208

1 unchanged sentence

Net loss attributable to nCino, Inc., including adjustment to redeemable non-controlling interest — — — — — — ( 396 ) ( 40,140 ) ( 40,536 )

— — — — — — ( 396 ) — ( 40,140 ) ( 40,536 )

Balance, January 31, 2021 93,643,759 47 — — — — 585,956 240 ( 161,064 ) 425,179

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Net loss attributable to nCino, Inc., including adjustment to redeemable non-controlling interest — — — — — — ( 894 ) — ( 48,552 ) ( 49,446 )

— — — — — — ( 894 ) — ( 48,552 ) ( 49,446 )

Balance, January 31, 2022 109,778,542 55 — — — — 1,277,258 ( 72 ) ( 209,616 ) 1,067,625

Exercise of stock options 579,662 1 — — — — 3,749 — — 3,750

Stock issuance upon vesting of restricted stock units 883,561 — — — — — — — — —

Stock issuance under the employee stock purchase plan 182,367 — — — — — 4,450 — — 4,450

Stock-based compensation — — — — — — 50,207 — — 50,207

Other comprehensive income — — — — — — — 766 — 766

Net loss attributable to nCino, Inc., including adjustment to redeemable non-controlling interest — — — — — — ( 1,995 ) — ( 100,725 ) ( 102,720 )

Balance, January 31, 2023 111,424,132 $ 56 — $ — — $ — $ 1,333,669 $ 694 $ ( 310,341 ) $ 1,024,078

The accompanying notes are an integral part of these consolidated financial statements .

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Amortization of costs capitalized to obtain revenue contracts 4,682 5,779 8,459

Amortization of debt issuance costs — — 177

Stock-based compensation 25,208 28,477 50,232

Deferred income taxes 168 ( 24,280 ) 1,627

Provision for (recovery of) bad debt ( 105 ) 100 90

Provision for bad debt 100 90 806

Net foreign currency (gains) losses ( 1,691 ) 1,860 1,548

14 unchanged sentences

Acquisition of business, net of cash acquired — ( 268,994 ) 676

Acquisition of assets — — ( 563 )

Purchases of property and equipment ( 4,338 ) ( 5,463 ) ( 18,338 )

Purchase of investment — — ( 4,031 )

Purchase of investments (related party $ 0 , $ 0 , and $ 2,500 , respectively)

— ( 4,031 ) ( 2,500 )

Net cash used in investing activities ( 4,338 ) ( 278,488 ) ( 20,725 )

2 unchanged sentences

Payments of costs related to initial public offering ( 2,765 ) — —

Investment from redeemable non-controlling interest 4,513 — —

Proceeds from stock issuance 80,000 — —

Proceeds from borrowings on revolving credit facility — — 50,000

Payments on revolving credit facility — — ( 20,000 )

Payments of debt issuance costs — — ( 367 )

Stock issuance costs — ( 210 ) —

Payments of deferred costs ( 1,412 ) — —

Exercise of stock options 8,745 13,907 3,750

Proceeds from stock issuance under the employee stock purchase plan — — 2,543

Stock issuance under the employee stock purchase plan — 2,543 4,450

Contingent consideration payments ( 197 ) — —

3 unchanged sentences

Net increase (decrease) in cash, cash equivalents, and restricted cash 280,241 ( 283,026 ) ( 981 )

Cash and cash equivalents, beginning of period 74,347 91,184 371,425

Cash, cash equivalents, and restricted cash, beginning of period 91,184 371,425 88,399

Cash, cash equivalents, and restricted cash, end of period $ 371,425 $ 88,399 $ 87,418

Reconciliation of cash, cash equivalents, and restricted cash, end of period:

Cash and cash equivalents $ 91,184 $ 371,425 $ 88,014

Restricted cash included in other long-term assets — — 385

Total cash, cash equivalents, and restricted cash, end of period $ 91,184 $ 371,425 $ 88,399

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

2 unchanged sentences

2021 2022 2023

Reconciliation of cash, cash equivalents, and restricted cash, end of period:

Cash and cash equivalents $ 371,425 $ 88,014 $ 82,036

Restricted cash included in other long-term assets — 385 5,382

Total cash, cash equivalents, and restricted cash, end of period $ 371,425 $ 88,399 $ 87,418

Supplemental disclosure of cash flow information

Cash paid during the year for taxes, net of refunds $ 369 $ 631 $ 1,003

Cash paid during the year for interest $ — $ 130 $ 1,514

Cash paid for taxes, net of refunds $ 631 $ 1,003 $ 664

Cash paid for interest $ 130 $ 1,514 $ 2,617

Supplemental disclosure of noncash investing and financing activities

1 unchanged sentence

Building-leased facility acquired through financing obligation $ 16,300 $ 18,154 $ 22,402

Deferred costs, accrued but not paid $ 357 $ — $ —

Fair value of common stock issued as consideration for business acquisition $ — $ 647,509 $ —

Costs related to initial public offering, reclassified from other long term assets to equity $ 1,769 $ — $ —

Fair value of contingent consideration in connection with business acquisition in other long-term liabilities $ 197 $ — $ —

Fair value of contingent consideration in connection with business acquisition included in equity $ 5,857 $ — $ —

Accrued purchase price related to acquisition $ — $ — $ 54

Accrued purchase price related to acquisitions $ — $ 54 $ 356

Measurement period adjustment relating to business acquisition $ — $ — $ 1,285

The accompanying notes are an integral part of these consolidated financial statements .

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(now nCino OpCo, Inc., "nCino OpCo") entered into an Agreement and Plan of Merger (the "Merger Agreement") with Penny HoldCo, Inc.

(now nCino, Inc.), a Delaware corporation incorporated on November 12, 2021 as a wholly-owned subsidiary of nCino OpCo, and certain other parties.

(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.

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On January 7, 2022, pursuant to the Merger Agreement, nCino, Inc.

(formerly Penny HoldCo, Inc.) and nCino OpCo completed a series of mergers in which nCino, Inc.

and nCino OpCo completed a series of mergers in which nCino, Inc.

became the parent of nCino OpCo and SimpleNexus, LLC ("SimpleNexus").

4 unchanged sentences

commenced using nCino OpCo's trading history under the ticker symbol "NCNO".

In these consolidated financial statements, nCino Opco (formerly nCino, Inc.) and nCino, Inc.

(formerly Penny HoldCo, Inc.), are collectively referred to as the "Company".

See Note 7 "Business Combinations" for additional information regarding the SimpleNexus acquisition.

Unless otherwise indicated or the context otherwise requires, references to “we,” “us,” “our,” “nCino,” and the “Company” refer to nCino, Inc.

and its consolidated subsidiaries after the Merger Agreement and to nCino OpCo, Inc.

(formerly known as nCino, Inc.) and its consolidated subsidiaries before the Merger Agreement.

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 offices in Lehi and Salt Lake City, Utah;

Macon, Georgia;

London, United Kingdom;

Sydney and Melbourne, Australia;

Toronto, Canada;

and Tokyo, Japan.

The Company is headquartered in Wilmington, North Carolina and has various locations in the US, North America, Europe and Asia Pacific.

Fiscal Year End:

The Company’s fiscal year ends on January 31.

Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation:

The accompanying 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").

The 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.

Initial Public Offering:

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Prior to the closing of the IPO, the Company's certificate of incorporation was amended such that all outstanding shares of voting common stock and non-voting common stock were reclassified into a single class of stock designated as common stock which has one vote per share.

In addition, effective upon the closing of the IPO, the Company's certificate of incorporation was amended and restated such that the total number of shares of common stock authorized to issue, par value $ 0.0005 , was increased to 500,000,000 shares and the total number of shares of preferred stock authorized to issue, par value $ 0.001 , was increased to 10,000,000 shares.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

$ 0.001 , was increased to 10,000,000 shares.

In connection with the IPO, the Company issued and sold 9,269,000 shares of common stock (including shares issued pursuant to the exercise in full of the underwriters' option to purchase additional shares) at a public offering price of $ 31.00 per share for net proceeds of $ 268.4 million, after deducting underwriters' discounts and commissions.

4 unchanged sentences

The Company did not offer any shares of common stock in the Secondary Offering and did not receive any proceeds from the sale of the shares of common stock by the Selling Stockholders.

The Company incurred costs of $ 1.0 million

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

in relation to the Secondary Offering for the fiscal year ended January 31, 2021 and such costs are recorded as a component of general and administrative expenses on the consolidated statements of operations.

The Company incurred costs of $ 1.0 million in relation to the Secondary Offering for the fiscal year ended January 31, 2021 and such costs are recorded as a component of general and administrative expenses on the consolidated statements of operations.

The Company received $ 1.7 million in cash (excluding withholding taxes) in connection with the exercise of 554,112 options by certain stockholders participating in the Secondary Offering.

1 unchanged sentence

The release consisted of both outstanding shares and shares subject to options.

Fiscal Year End:

The Company’s fiscal year ends on January 31.

Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation:

The 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.

See the variable interest entity section below and Note 3 "Variable Interest Entity and Redeemable Non-Controlling Interest" for additional information regarding the Company’s variable interest entity.

Effective February 1, 2021, the Company adopted the requirement of Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842) using the alternative transition method.

Under this method, the Company is not required to restate or disclose the effects of applying this ASU for comparative periods.

See the Recently Adopted Accounting Guidance section for the adoption of ASU 2016-02, Leases (Topic 842).

Reclassification:

The Company reclassified certain prior year amounts to conform to the current year presentation.

These reclassifications had no impact on the previously reported total assets, liabilities, stockholder’s deficit, or net loss.

Variable Interest Entity:

The Company holds an interest in a Japanese company (“nCino K.K.”) that is considered a variable interest entity ("VIE").

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 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 investment, 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 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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

earnings, additional paid-in-capital.

These interests are presented on the consolidated balance sheets outside of equity under the caption “Redeemable non-controlling interest.”

Use of Estimates:

The preparation of 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 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, stand-alone selling price, and other revenue items requiring significant judgement;

the average period of benefit associated with costs capitalized to obtain revenue contracts;

1 unchanged sentence

the useful lives of intangible assets;

the valuation allowance on deferred tax assets;

income taxes and the related valuation allowance on deferred tax assets;

redemption value of redeemable non-controlling interest;

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The Company maintains its cash, cash equivalents and restricted cash with high-credit-quality financial institutions.

As of January 31, 2021, no individual customer represented more than 10 % of accounts receivable and, as of January 31, 2022, one customer represented 12 % of accounts receivable.

As of January 31, 2022, one individual customer represented more than 12 % of accounts receivable and, as of January 31, 2023, no individual customer represented over 10% of accounts receivable.

For the fiscal years ended January 31, 2022 and 2023, no individual customer represented more than 10% of the Company’s total revenues.

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Revenues are recognized when a contract exists between the Company and a customer and upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services.

The Company enters into contracts that can include various combinations of subscription and professional services, which may be capable of being distinct and accounted for as separate performance obligations, or in the case of offerings such as subscription services and support, accounted for as a single performance obligation.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

Revenues are recognized net of allowances and any taxes collected from customers, which are subsequently remitted to governmental authorities.

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Subscription Revenues

Subscription revenues primarily consist of fees for providing customers access to the Company’s solutions, with routine customer support and maintenance related to email and phone support, bug fixes, and unspecified software updates, and

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

upgrades released when and if available during the maintenance term.

Revenues are generally recognized on a ratable basis over the contract term beginning on the date that the Company’s service is made available to the customer, which the Company believes best reflects the manner in which the Company’s customers utilize the Company’s subscription offerings.

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Professional services revenues primarily consist of fees for deployment, configuration, and optimization services, training.

The majority of the Company’s professional services contracts are billed on a fixed price basis, and revenues are recognized over time based on a proportional performance methodology which utilizes input methods.

A portion of the Company’s professional services contracts are billed on a time and materials basis and revenues are recognized over time as the services are performed.

The majority of the Company’s professional services contract revenues are recognized over time based on a proportional performance methodology which utilizes input methods.

The Company’s professional services contracts are billed on a time and materials or fixed fee basis.

Contracts with Multiple Performance Obligations

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The Company capitalizes incremental costs of obtaining a non-cancelable subscription and support revenue contract if the Company expects the benefit of those costs to be longer than one year.

The capitalized amounts are subsequently amortized over the estimated life of the contract.

The capitalized amounts are subsequently

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

amortized over the estimated life of the contract.

Capitalized amounts consist primarily of sales commissions paid to the Company’s direct sales force.

6 unchanged sentences

Contracts with customers may include multiple services requiring allocation of the transaction price across the different performance obligations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

Standalone selling price is established by maximizing the amount of observable inputs, primarily actual historical selling prices for performance obligations where available and includes consideration of factors such as go-to-market model and customer size.

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Deferred revenue does not represent the total contract value of annual or multi-year non-cancellable subscription agreements.

Deferred revenue that will be recognized during the succeeding 12-month period are recorded as deferred revenue, current portion, and the remaining portion is recorded as deferred revenue, net of current portion on the consolidated balance sheets.

Deferred revenue that will be recognized during the succeeding 12-

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

month period are recorded as deferred revenue, current portion, and the remaining portion is recorded as deferred revenue, net of current portion on the consolidated balance sheets.

Payment terms vary by contract, although terms generally include a requirement of payment within 30 to 45 days.

6 unchanged sentences

Restricted Cash:

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 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, 2022 and January 31, 2023 on the 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

revenue recognition may differ from the timing of invoicing to customers.

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.

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Relevant risk characteristics include customer size and historical loss patterns.

See the Recently Adopted Accounting Guidance section for the adoption of ASU 2016-13, Financial Instruments–Credit Losses:

Measurement of Credit Losses on Financial Instruments.

A summary of activity in the allowance for doubtful accounts is as follows:

This estimate is analyzed quarterly and adjusted as necessary.

A summary of activity in the allowance for doubtful accounts and reserve for expected credit losses is as follows:

Fiscal Year Ended January 31,

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Balance, beginning of period $ — $ 88 $ 151

Charged to (recovery of) bad debt expense ( 105 ) 100 90

Other ( 18 ) ( 17 ) ( 24 )

Charged to bad debt expense 100 90 806

Write-offs and other ( 17 ) ( 24 ) ( 55 )

Translation adjustments 5 ( 3 ) ( 3 )

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The Company did not have any finance leases as of January 31, 2023.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

Operating lease right-of-use ("ROU") assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

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Lease expense for such leases is recognized on a straight-line basis over the lease term.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

Property and Equipment:

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Goodwill is not amortized, but rather the carrying amounts of these assets are assessed for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable.

Goodwill is tested for impairment annually on November 1, the first day of the fourth quarter of the fiscal year.

To perform our impairment testing, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of our single reporting unit is less than its carrying amount.

The qualitative factors we consider include, but are not limited to, macroeconomic conditions, industry and market conditions, company-specific events, changes in circumstances and after-tax cash flows.

Goodwill is tested for impairment annually on November 1, the first day of the fourth quarter of the fiscal year, or more frequently if circumstances indicate an impairment may have occurred between annual impairment tests.

The Company has one reporting unit, therefore the Company evaluates goodwill for impairment at the entity level.

To perform its impairment testing, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of its single reporting unit is less than its carrying amount.

The qualitative factors we consider include, but are not limited to, macroeconomic conditions, industry and market conditions, company-specific events, changes in circumstances and our share price.

If the qualitative factors indicate that the fair value of the reporting unit is greater than the carrying value of the net assets assigned to the reporting unit, then we do not consider the assigned goodwill to be impaired.

The Company is only required to perform the two-step impairment test if the qualitative factors indicate that it is more likely than not that the fair value of the reporting unit is less than its carrying amount.

The Company may elect to perform the two-step impairment test without considering such qualitative factors.

Goodwill impairment, if any, is determined by comparing the reporting unit’s fair value to its carrying value.

If it is determined that it is more likely than not that the fair value of the Company is less than the carrying amount, a quantitative assessment is performed by comparing the fair value of a reporting unit with its carrying amount.

The Company may elect to bypass the qualitative

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

assessment and perform the quantitative assessment.

An impairment loss is recognized in an amount equal to the excess of the reporting unit’s carrying value over its fair value, up to the amount of goodwill allocated to the reporting unit.

The Company has one reporting unit, therefore the Company evaluates goodwill for impairment at the entity level.

There is no goodwill impairment for the fiscal years ended January 31, 2021, 2022, and 2023.

Variable Interest Entity:

The Company holds an interest in a Japanese company (“nCino K.K.”) that is considered a variable interest entity ("VIE").

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 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 investment, 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 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.

and the Company.

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 consolidated balance sheets outside of equity under the caption “Redeemable non-controlling interest.”

Business Combinations:

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The Company’s estimates are inherently uncertain and may be subject to refinement due to unanticipated events and circumstances.

For intangible assets, the Company typically uses the income method of valuation.

This method starts with a forecast of all of the expected future net cash flows for each asset.

For intangible assets, the Company typically uses income-based methods of valuation (for example, the multi-period excess earnings method is used to estimate the fair value estimate of customer relationships and the relief from royalty method is used in the fair value estimate of developed technologies) .

These methods typically start with a forecast of all of the expected future net cash flows for each asset.

These cash flows are then adjusted to present value by applying an appropriate discount rate that reflects the risk factors associated with the cash flow streams.

Some of the more significant estimates and assumptions inherent in the income method or other

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

methods include the amount and timing of projected future cash flows, the discount rate selected to measure the risks inherent in the future cash flows, and the assessment of the asset’s life cycle and the competitive trends impacting the asset, including consideration of any technical, legal, regulatory, or economic barriers to entry.

Some of the more significant estimates and assumptions inherent in these methods are forecasted revenues, obsolescence life and factor, customer attrition rate, and the discount rate among other assumptions.

Determining the useful life of an intangible asset also requires judgment as different types of intangible assets will have different useful lives and certain assets may even be considered to have indefinite useful lives.

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For acquisitions involving additional consideration to be transferred to the selling parties in the event certain future events occur or conditions are met (“contingent consideration”), the Company recognizes the acquisition-date fair value of contingent consideration as part of the consideration transferred in exchange for the business combination.

Contingent consideration meeting the criteria to be classified as equity in the consolidated balance sheets is not remeasured, and its subsequent settlement is recorded within stockholders’ equity.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

consideration meeting the criteria to be classified as equity in the consolidated balance sheets is not remeasured, and its subsequent settlement is recorded within stockholders’ equity.

Contingent consideration classified as a liability is remeasured to fair value at each reporting date until the contingency is resolved, with any changes in fair value recognized in the Company’s consolidated statements of operations.

The Company's investment is a non-marketable equity investment without readily determinable fair value and for which the Company does not have control or significant influence.

The investment is 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 investment continues to qualify for the measurement alternative.

Gains or losses resulting from changes in fair value are recognized currently in the Company's consolidated statement of operations.

The Company assesses the investment whenever events or changes in circumstances indicate that the carrying value of the investment may not be recoverable.

Deferred Rent:

Prior to the adoption of ASU 2016-02, Leases (Topic 842), operating leases rent expense was recognized on a straight-line basis over the terms of the leases and the difference between cash rent payments and recognized rent expense was recorded as a deferred rent liability.

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 consolidated statement 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.

Debt Issuance Costs:

Debt issuance costs are initially deferred and amortized to interest expense on a straight-line basis over the expected term of the debt.

The Company uses the straight-line basis as it approximates the amounts calculated under the effective-interest method.

Unamortized debt issuance costs related to the secured revolving credit facility are considered long-term and are included in other long-term assets in the consolidated balance sheets.

Cost of Revenues:

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As such, general overhead expenses are reflected in each cost of revenues and operating expenses category.

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.

Advertising costs are expensed as incurred and consist of advertising, third-party marketing, branded marketing, and conference and event expenses.

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Deferred tax assets are also recorded for any tax attributes, such as net operating losses and tax credit carryforwards.

Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates on the date of enactment within income

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates on the date of enactment within income tax expense.

The Company reflects the expected amount of income taxes to be paid or refunded during the year as current income tax expense or benefit, as applicable.

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The tax benefits recognized in the consolidated financial statements from such a position are measured based on the benefit having a greater than 50% likelihood of being realized upon ultimate settlement.

The guidance on accounting for uncertainty in income taxes also addresses de-recognition, classification, interest, and penalties on income taxes, and accounting interim periods.

When and if applicable, potential interest and penalties are accrued as incurred, within income tax expense.

The guidance on

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

accounting for uncertainty in income taxes also addresses de-recognition, classification, interest, and penalties on income taxes, and accounting interim periods.

When and if applicable, potential interest and penalties are accrued as incurred, within income tax provision.

Other Comprehensive Income (Loss):

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For purposes of the diluted loss per share calculation, basic and diluted loss per share were the same, as the effect of all potentially dilutive securities would have been anti-dilutive.

Recently Adopted Accounting Guidance:

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842).

The standard will affect all entities that lease assets and will require lessees to recognize a lease liability and a right-of-use asset for all leases (except for short-term leases that have a duration of less than one year) as of the date on which the lessor makes the underlying asset available to the lessee.

For lessors, accounting for leases is substantially the same as in prior periods.

In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases, to clarify how to apply certain aspects of the new leases standard.

ASU 2016-02, as subsequently amended for various technical issues, is effective for emerging growth companies following private company adoption dates in fiscal years beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022, and early adoption is permitted.

If the Company were to cease meeting the emerging growth company criteria during the fiscal year ending January 31, 2022, this ASU would

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

be effective for the Company for its Annual Report on Form 10-K for the fiscal year ended January 31, 2022.

Since the Company ceased to qualify as an emerging growth company as of January 31, 2022, the Company adopted this ASU effective February 1, 2021.

The Company used the alternative transition method in which the Company is not required to restate or disclose the effects of applying this ASU for comparative periods.

The Company elected the package of practical expedients which permits the Company to not reassess prior conclusions pertaining to lease identification, lease classification, and initial direct costs.

The Company did not elect the use-of-hindsight or the practical expedient pertaining to land easements.

In addition, the Company elected ongoing practical expedients including the option to not recognize right-of-use assets and lease liabilities for short term leases (leases with an original term of twelve months or less).

The Company also elected the practical expedient to not separate lease and non-lease components for our facilities and equipment leases.

The adoption of this ASU resulted in the recognition of operating right-of-use assets of $ 10.5 million and lease liabilities of $ 12.2 million, and the derecognition of deferred rent on the Company's consolidated balance sheet on February 1, 2021.

The adoption of this ASU did not have a material impact on the Company's consolidated statements of operations, comprehensive loss or the consolidated statements of cash flows.

Upon the adoption of this ASU there was no change to the accounting for the Company's financing obligation.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments–Credit Losses:

Measurement of Credit Losses on Financial Instruments , which changes the impairment model for most financial assets.

The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for losses.

ASU 2016-13, as subsequently amended for various technical issues, is effective for emerging growth companies following private company adoption dates for fiscal years beginning after December 15, 2022 and for interim periods within those fiscal years.

If the Company were to cease meeting the emerging growth company criteria during the fiscal year ending January 31, 2022, this ASU would be effective for the Company for its Annual Report on Form 10-K for the fiscal year ended January 31, 2022.

Since the Company ceased to qualify as an emerging growth company as of January 31, 2022, the Company adopted this ASU effective February 1, 2021.

The adoption of this ASU, which impacted the Company's allowance for doubtful accounts, did not have a material impact on the Company's consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes , which is intended to simplify various aspects related to accounting for income taxes.

ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.

ASU 2019-12 is effective for emerging growth companies following private company adoption dates in fiscal years beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022, with early adoption permitted, including adoption in an interim period.

Since the Company ceased to qualify as an emerging growth company as of January 31, 2022, the Company adopted this ASU effective February 1, 2021.

The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

In October 2020, the FASB issued ASU 2020-10, Codification Improvements .

The guidance includes amendments to improve the codification by ensuring that all guidance that requires or provides an option for an entity to provide information in the notes to the financial statements is codified in the disclosure section of the codification and to clarify guidance so that entities can apply guidance more consistently on codifications that are varied in nature where the original guidance may have been unclear.

ASU 2020-10 is effective for emerging growth companies following private company adoption dates in fiscal years beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022, and early adoption is permitted.

Since the Company ceased to qualify as an emerging growth company as of January 31, 2022, the Company adopted this ASU effective February 1, 2021.

The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers .

The standard addresses diversity and inconsistency related to

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

the recognition and measurement of contract assets and contract liabilities acquired in a business combination.

ASU 2021-08 requires an acquirer to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, Revenue from Contracts with Customers.

ASU 2021-08 is effective for emerging growth companies following private company adoption dates in fiscal years beginning after December 15, 2023, and for interim periods within those fiscal years, and early adoption is permitted.

Since the Company ceased to qualify as an emerging growth company as of January 31, 2022, this ASU would be effective for the Company for its Annual Report on Form 10-K for the fiscal year ended January 31, 2024, with early adoption permitted.

The Company early-adopted this ASU during the fourth quarter of fiscal 2022.

Early adoption requires retrospective adoption to business combinations completed since the beginning of the annual period in which the new guidance is adopted and prospective adoption to business combinations that occur after the date of adoption.

There was no retrospective impact of early adoption since we did not have any acquisitions in our first three quarters of fiscal 2022.

The SimpleNexus acquisition disclosed in Note 7 "Business Combinations" is in accordance with ASU 2021-08 which resulted in the deferred revenue being recognized under Topic 606 instead of fair value at the acquisition date.

The adoption of this ASU did not have any other material impact on the Company’s consolidated financial statements.

Variable Interest Entity and Redeemable Non-Controlling Interest

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The estimated redemption value of the call/put option embedded in the redeemable non-controlling interest was $ 3.3 million at January 31, 2023.

NOTES TO 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:

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Balance, beginning of period $ 4,356 $ 3,791 $ 2,882

Investment by redeemable non-controlling interest 4,513 — —

Net loss attributable to redeemable non-controlling interest (excluding adjustment to non-controlling interest) ( 1,130 ) ( 1,569 ) ( 1,119 )

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The Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

Quoted prices (unadjusted) in active markets for identical assets or liabilities.

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The carrying amounts of cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value as of January 31, 2022 and January 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.

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, 2021 and January 31, 2022 and indicates the fair value hierarchy of the valuation:

The following table summarizes the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

Company’s financial assets measured at fair value as of January 31, 2022 and January 31, 2023 and indicates the fair value hierarchy of the valuation:

Fair value measurements on a recurring basis as of January 31, 2022

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Money market accounts (included in cash and cash equivalents) $ 11,129 $ — $ —

Time deposits (included in other long-term assets) 385 — —

Total assets $ 11,514 $ — $ —

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Money market accounts (included in cash and cash equivalents) $ 17,149 $ — $ —

$ 11,129 $ — $ —

Time deposits (included in other long-term assets) 382 — —

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Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

The Company's asset measured at fair value on a nonrecurring basis includes the investment accounted for under the measurement alternative.

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 fiscal years ended January 31, 2021, 2022, and 2023, respectively.

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$ 204,293 $ 273,865 $ 408,315

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

The Company disaggregates its revenues from contracts with customers by geographic location.

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No country outside the United States represented 10% or more of total revenues.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

Contract Amounts

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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 and $ 8.6 million from the acquisition of SimpleNexus, which were offset by decreases due to revenues recognized in the period.

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 fiscal year ended January 31, 2023, $ 120.7 million of revenues were recognized out of the deferred revenue balance as of January 31, 2022.

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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 $ 912.3 million, which includes approximately $ 54.0 million of remaining performance obligation related to the SimpleNexus acquisition, as of January 31, 2022.

Remaining performance obligations were $ 944.1 million as of January 31, 2023.

The Company expects to recognize approximately 67 % of its remaining performance obligation as revenues in the next 24 months, approximately 29 % more in the following 25 to 48 months, and the remainder thereafter.

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During the fiscal years ended January 31, 2021, 2022, and 2023, the Company amortized $ 4.7 million, $ 5.8 million, and $ 8.5 million of capitalized contract acquisition costs within sales and marketing expense, respectively.

The Company did no t incur any impairment losses.

The Company did not incur any impairment losses.

Capitalized contract acquisition costs were $ 24.0 million and $ 27.6 million as of January 31, 2022 and January 31, 2023, of which $ 16.4 million and $ 18.2 million was long-term in the consolidated balance sheets, respectively.

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$ 60,677 $ 84,442

1 The increase in buildings and land was due to the completion of a parking deck for $ 17.7 million, which is an addition to our existing headquarters, for which the Company is considered the owners for accounting purposes.

See Note 15 "Commitments and Contingencies" for additional details including future commitments.

2 The increase in construction in progress is primarily due to construction for an additional office building that is on the property of our existing headquarters for which the Company is considered the owners for accounting purposes.

See Note 15 "Commitments and Contingencies" for additional details including future commitments.

1 See Note 16 "Commitments and Contingencies."

The Company recognized depreciation expense as follows:

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Business Combinations

On January 7, 2022 (the "Acquisition Date") through a series of mergers, the Company acquired all outstanding membership interests of SimpleNexus which provides mobile-first homeownership software that spans engagement,

The Company acquired SimpleNexus for its complementary products and mobile-first offerings and believes this will provide greater value for new and existing customers.

The business combination is considered a related party transaction as entities affiliated with Insight Partners (“Insight Partners”) were equityholders of SimpleNexus and certain other parties in connection with the series of mergers, and other affiliates of Insight Partners are currently significant stockholders of the Company.

The Company has included the financial results of SimpleNexus in the consolidated statements of operations from Acquisition date.

The transaction costs associated with the acquisition were approximately $ 10.0 million and were recorded in general and administrative expenses for the fiscal year

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

origination, closing and business intelligence, headquartered in Lehi, Utah.

The Company acquired SimpleNexus for its complementary products and mobile-first offerings and believes this will provide greater value for new and existing customers.

The business combination is considered a related party transaction as entities affiliated with Insight Partners (“Insight Partners”) are equityholders of SimpleNexus and certain other parties in connection with the series of mergers, and other affiliates of Insight Partners are currently significant stockholders of the Company.

The Company has included the financial results of SimpleNexus in the consolidated statements of operations from the date of acquisition.

The transaction costs associated with the acquisition were approximately $ 10.0 million and were recorded in general and administrative expenses for the fiscal year ended January 31, 2022.

ended January 31, 2022.

The Company also recognized $ 0.2 million in stock issuance costs associated with the share consideration that were reported as a reduction of additional paid-in capital within stockholders' equity.

The Acquisition-Date estimated fair value of the consideration transferred is as follows:

The fair value of the consideration transferred was $ 933.6 million on the Acquisition Date, subject to a net working capital adjustment.

The net working capital adjustment was finalized in July 2022, resulting in a decrease to the purchase price of $ 0.7 million which was recorded to goodwill.

The total consideration transferred is as follows:

Total Consideration

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Voting common stock issued ( 12,762,146 shares) 1

Net working capital adjustment ( 676 )

Total consideration $ 932,919

1 The Company assumed a restricted stock award with an estimated fair value of $ 1.4 million.

$ 0.3 million was allocated to the purchase consideration and $ 1.1 million was allocated to future services and will be expensed over the service period remaining in fiscal 2023 on a straight-line basis.

Approximately $ 3.0 million of the cash paid is being held in escrow until the completion of the final post-closing adjustments.

$ 0.3 million was allocated to the purchase consideration and $ 1.1 million was allocated to future services and was expensed over the service period remaining in fiscal 2023 on a straight-line basis.

The number of shares for stock consideration was based on a 20 -day volume weighted average price fair value of $ 72.53 established prior to and including November 12, 2021 to determine the number of shares to be issued on the Acquisition Date.

On January 7, 2022, the Company's closing stock price was $ 50.82 per share.

On the Acquisition Date, the Company's closing stock price was $ 50.82 per share.

In addition, the Company issued 927,744 RSUs with an approximate fair value of $ 47.2 million to certain employees of SimpleNexus, which will vest over four years subject to such employees' continued employment.

The RSUs will be recorded as stock-based compensation expense post-acquisition as the RSUs vest and has been excluded from the purchase consideration.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

The following table summarizes the preliminary fair values of assets acquired and liabilities assumed as of the Acquisition Date:

The following table summarizes the final fair values of assets acquired and liabilities assumed in connection with the acquisition, including measurement period adjustments:

Cash and cash equivalents $ 17,038

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Net assets acquired $ 932,919

During the fiscal year ended January 31, 2023, within the one year measurement period, we finalized the fair value of the assets acquired and liabilities assumed in the acquisition, and the amounts presented above are now final.

The Company recorded measurement period adjustments that included a $ 2.0 million adjustment to decrease goodwill for a $ 1.3 million deferred income tax adjustment and a $ 0.7 million net working capital adjustment.

The transaction was accounted for using the acquisition method and, as a result, tangible and intangible assets acquired and liabilities assumed were recorded at their estimated fair values at the Acquisition Date.

Any excess consideration over the fair value of the assets acquired and liabilities assumed was recognized as goodwill and is subject to revision as the purchase price allocation is completed.

Due to the timing and the magnitude of the transaction, initial accounting for the acquisition is not complete, and further measurement period adjustments may occur in fiscal year 2023, but no later than one year from the Acquisition Date.

The Company has estimated the preliminary fair value of net assets acquired based on information currently available and with the assistance of independent third-party valuations and will continue to adjust those estimates as additional information becomes available, valuations are finalized and the tax returns for the pre-acquisition period are completed.

The primary areas of the acquisition accounting that remain preliminary relate to, but are not limited to, (i) finalizing the review and valuation of intangible assets (including key assumptions, inputs and estimates), (ii) finalizing the Company's review of certain assets acquired and liabilities assumed (iii) finalizing the evaluation and valuation of certain legal matters and/or loss contingencies, including those that the Company may not yet be aware of but meet the requirement to qualify as a pre-acquisition contingency, and (iv) finalizing our estimate of the impact of acquisition accounting on deferred income taxes or liabilities.

As the initial acquisition accounting is based on preliminary assessments, actual values may differ materially when final information becomes available.

The Company believes the information gathered to date provides a reasonable basis for estimating the preliminary fair values of assets acquired and liabilities assumed.

The Company will continue to evaluate these items until they are satisfactorily resolved and make necessary adjustments, within the allowable measurement period.

As described in Note 1 "Summary of Significant Accounting Policies", the Company adopted ASU 2021-08 which requires an acquirer to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606.

The Company determined the acquisition date deferred revenue balance in accordance with Topic 606.

Any excess consideration

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

The following table sets forth the components of the preliminary fair value of identifiable intangible assets and their estimated useful lives over which the acquired intangible assets will be amortized on a straight-line basis, as this approximates the pattern in which economic benefits of the assets are consumed as of the Acquisition Date:

over the fair value of the assets acquired and liabilities assumed was recognized as goodwill.

The Company determined the acquisition date deferred revenue balance in accordance with Topic 606.

The following table sets forth the components of the fair value of identifiable intangible assets and their estimated useful lives over which the acquired intangible assets will be amortized on a straight-line basis, as this approximates the pattern in which economic benefits of the assets are consumed as of the Acquisition Date:

Fair Value Useful Life

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Total intangible assets subject to amortization $ 162,000

Developed technology represents the preliminary estimated fair value of SimpleNexus’ technology.

Customer relationships represent the preliminarily estimated fair value of the underlying relationships with SimpleNexus' customers.

Trade names represents the preliminary estimated fair value of SimpleNexus’ company name.

The Company continues to assess the rates used in the preliminary valuation methods such as, but not limited to, the discount rates for developed technology, customer relationships and trade name and customer attrition rate for customer relationships.

The Company recognized goodwill of approximately $ 785.2 million in connection with the acquisition of SimpleNexus.

Goodwill is primarily attributable to expanded market opportunities, synergies expected from the acquisition, and assembled workforce and approximately $ 189.2 million is expected to be deductible for tax purposes.

The results of operations of SimpleNexus since the acquisition are included in the Company's consolidated statements of operations for the fiscal year ended January 31, 2022.

The revenues and net loss for SimpleNexus for the period from the Acquisition Date through January 31, 2022, were $ 3.9 million and $ 3.6 million, respectively.

Developed technology represents the fair value of SimpleNexus’ technology.

Customer relationships represent the fair value of the underlying relationships with SimpleNexus' customers.

Trade names represents the fair value of SimpleNexus’ company name.

Goodwill is primarily attributable to expanded market opportunities, synergies expected from the acquisition, and assembled workforce and approximately $ 189.2 million is deductible for tax purposes.

The Company's consolidated statements of operations include the revenues and net loss for SimpleNexus for the period from the Acquisition Date through January 31, 2022, of $ 3.9 million and $ 3.6 million, respectively.

The unaudited pro forma statements of operations for the years ended January 31, 2021 and January 31, 2022, shown in the table below, give effect to the SimpleNexus acquisition, described above, as if it had occurred on February 1, 2020.

6 unchanged sentences

Goodwill and Intangible Assets

The carrying amount of goodwill was $ 57.1 million and $ 841.5 million as of January 31, 2021 and January 31, 2022, respectively.

The change in the carrying amounts of goodwill was as follows:

Balance, as of January 31, 2021 $ 57,149

Acquisition of SimpleNexus 785,156

Translation adjustments ( 818 )

Balance, as of January 31, 2022 841,487

Acquisition of SimpleNexus 785,156

Measurement period adjustments relating to the acquisition of SimpleNexus ( 1,961 )

Translation adjustments ( 86 )

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Amount Weighted Average Remaining Useful Life (Years)

Acquired developed technology $ 6,320 $ ( 2,295 ) $ 4,025 $ 83,625 $ ( 4,804 ) $ 78,821 4.8

Developed technology $ 83,625 $ ( 4,804 ) $ 78,821 $ 83,605 $ ( 21,818 ) $ 61,787 4.0

Customer relationships 91,711 ( 4,748 ) 86,963 91,710 ( 13,418 ) 78,292 9.1

Trademarks and trade name 14,626 ( 288 ) 14,338 14,626 ( 2,705 ) 11,921 5.0

Other — — — 919 ( 94 ) 825 2.5

$ 189,962 $ ( 9,840 ) $ 180,122 $ 190,860 $ ( 38,035 ) $ 152,825 6.7

The Company recognized amortization expense as follows:

The Company recognized amortization expense for intangible assets as follows:

Fiscal Year Ended January 31,

1 unchanged sentence

Cost of subscription revenues $ 1,525 $ 2,604 $ 17,019

Cost of professional services and other revenues — — 94

Sales and marketing 1,670 2,303 11,087

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Reseller Agreement

The Company has a reseller agreement in place with a related party to utilize their platform and to develop the Company’s cloud-based banking software as an application within the related party’s hosted environment.

In June 2020, this agreement was renegotiated and expires in June 2027 and will automatically renew in annual increments thereafter unless either party gives notice of non-renewal before the end of the initial term or the respective renewal term.

Cost of subscription revenues in each of the fiscal years ended January 31, 2020, 2021, and 2022 substantially consists of fees paid for access to the related party’s platform, including their hosting infrastructure and data center operations.

The Company has recorded expenses of $ 22.8 million, $ 34.8 million, and $ 41.4 million for the fiscal years ended January 31, 2020, 2021, and 2022, respectively.

Based solely on information reported in a Schedule 13G/A filed with the SEC on February 11, 2022 the reseller is no longer considered a related party as of December 31, 2021.

The expenses presented above includes expenses while the reseller was a

The Company has a reseller agreement in place with a former related party to utilize their platform and to develop the Company’s cloud-based banking software as an application within the related party’s hosted environment.

This agreement was renegotiated and expires in June 2027 and will automatically renew in annual increments thereafter unless either party gives notice of non-renewal before the end of the initial term or the respective renewal term.

Cost of subscription revenues in each of the fiscal years ended January 31, 2021, 2022, and 2023 includes fees paid for access to the related party’s platform, including their hosting infrastructure and data center operations.

Based solely on information reported in a Schedule 13G/A filed with the SEC on February 11, 2022 the reseller is no longer considered a related party as of December 31, 2021 and the amounts disclosed related to them are accordingly presented while the reseller was considered a related party.

The reseller was

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

related party.

The reseller was a related party for a portion of the year ended January 31, 2022 and was no longer a related party as of January 31, 2022.

considered a related party for the year ended January 31, 2022 and was no longer considered a related party for the year ended January 31, 2023.

The Company has recorded expenses of $ 34.8 million and $ 41.4 million for the fiscal years ended January 31, 2021 and 2022, respectively.

The Company continues to do business with the reseller.

39 unchanged sentences

Stock Options

The calculated value of each option award is estimated at the date of grant using the Black-Scholes option valuation model that utilizes the assumptions included in the table below.

The Company recognizes stock-based expenses related to stock option awards on a straight-line basis over the requisite service period of the awards, which is generally the vesting term of four years .

Stock-based expenses are recognized net of estimated forfeiture activity.

The estimated forfeiture rate applied is based on historical forfeiture rates.

The expected term assumption, using the simplified method, reflects the period for which the Company believes the option will remain outstanding.

The Company determined the volatility of its stock by looking at the historic volatility of its peer companies.

The risk-free rate reflects the U.S.

Treasury yield for a similar expected life instrument in effect at the time of the grant.

The assumptions utilized for the fiscal year ended January 31, 2020 are as follows:

Fiscal Year Ended January 31,

Expected life (in years from vesting) 6.10 - 6.25

Expected volatility 40 %

Expected dividends 0.00 %

Risk-free interest rate 1.63 % - 2.59 %

The grant date weighted average calculated fair value of options issued, net of forfeitures, was $ 6.74 per share for the fiscal year ended January 31, 2020.

There were no stock options granted for the fiscal years ended January 31, 2021 and 2022.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

Stock option activity for the fiscal year ended January 31, 2023 was as follows:

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This intrinsic value changes based on changes in the fair value of the Company’s underlying stock.

On June 26, 2019, the Company entered into a separation agreement with an executive.

The agreement resulted in a modification of the former employee's 334,840 outstanding stock options to purchase voting common stock, which accelerated certain vesting and extended the exercise period, resulting in the recognition of $ 1.2 million of additional stock-based compensation expense for the year ended January 31, 2020.

As of January 31, 2023, there was $ 0.1 million of total unrecognized compensation expense related to unvested stock-based compensation arrangements under the 2014 and 2019 Plans.

That cost is expected to be recognized over a weighted average period of 0.59 years.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

Restricted Stock Units

4 unchanged sentences

Granted 2,224,268 41.54

Vested ( 559,191 ) 21.89

( 971,864 ) 40.80

Forfeited ( 733,457 ) 47.74

Nonvested, January 31, 2023 3,531,387 $ 44.00

1 Includes 88,303 RSUs that were not issued and outstanding as of January 31, 2023.

The weighted average grant date fair value for RSUs granted during the fiscal years ended January 31, 2021, 2022, and 2023 was $ 22.30 , $ 60.99 , and $ 41.54 .

3 unchanged sentences

The liquidity event-based condition was satisfied upon the IPO and the Company recognized an expense of $ 12.2 million in cost of revenues and operating expenses for RSUs as of that date, using the accelerated attribution recognition method for the fiscal year ended January 31, 2021.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

As of January 31, 2023, total unrecognized compensation expense related to non-vested RSUs was $ 117.4 million, adjusted for estimated forfeitures, based on the estimated fair value of the Company’s common stock at the time of grant.

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Thereafter, offering periods will begin on January 1 and July 1.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

The fair value of ESPP shares is estimated at the date of grant using the Black-Scholes option valuation model based on assumptions as follows for ESPP awards:

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Treasury yield for a similar expected life instrument in effect at the time of the grant of the ESPP share.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

The assumptions utilized for the ESPP shares for the fiscal year ended January 31, 2023 were as follows:

2 unchanged sentences

Expected volatility 48.70 % - 49.65 %

49.65 % - 84.59 %

Expected dividends 0.00 % 0.00 %

Risk-free interest rate 0.05 % - 0.22 %

0.22 % - 4.77 %

As of January 31, 2023, total unrecognized compensation expense related to the ESPP was $ 0.9 million.

10 unchanged sentences

Total stock-based compensation expense 1

$ 25,208 $ 28,477 $ 50,232

1 Includes $ 0.2 million benefit incurred for the fiscal year ended January 31, 2023 in connection with the restructuring plan commenced in January 2023.

See Note 19 "Restructuring" for more information.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

The components of loss before income taxes by domestic and foreign jurisdictions were as follows:

4 unchanged sentences

Loss before income taxes $ ( 40,684 ) $ ( 73,954 ) $ ( 97,773 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

The components of the income tax provision (benefit) consisted of the following:

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State income tax (provision) benefit, net of federal impact ( 0.3 ) 4.1 ( 0.4 )

Foreign rate differential 0.9 0.7 0.5

Stock-based compensation 59.9 48.8 0.1

Changes in valuation allowance ( 12.2 ) ( 69.3 ) ( 44.1 )

Tax credits 0.0 4.1 0.0

Executive compensation 0.0 ( 12.6 ) ( 3.7 )

Statutory tax rate law changes 0.0 2.7 0.0

Transaction costs ( 1.0 ) ( 1.3 ) ( 0.1 )

Foreign rate differential ( 0.4 ) 0.9 0.7

Nondeductible expenses ( 0.2 ) ( 0.1 ) ( 0.2 )

Impacts of adoption of the new revenue standard ( 8.8 ) 0.0 0.0

Other 0.2 0.0 ( 1.1 )

Executive compensation ( 12.6 ) ( 3.7 ) ( 2.4 )

Changes in valuation allowance ( 69.3 ) ( 44.1 ) ( 21.6 )

( 1.4 ) % 32.2 % ( 4.2 ) %

5 unchanged sentences

Net operating losses $ 129,155 $ 134,413

Research and development — 22,658

Financing obligations and lease liabilities 11,178 15,960

3 unchanged sentences

Deferred revenue 1,776 550

Deferred rent 415 —

Other 1,317 2,890

7 unchanged sentences

Lease asset ( 3,168 ) ( 2,678 )

Remaining performance obligations ( 331 ) ( 166 )

Other ( 166 ) —

2 unchanged sentences

The Company's net deferred tax liabilities were adjusted during 2022 to include $ 25.5 million of net deferred tax liabilities related to business combinations.

The net deferred tax asset (liability) was included in the consolidated balance sheets as follows:

Net deferred tax liabilities were included in the consolidated balance sheets as follows:

As of January 31,

2 unchanged sentences

Net deferred tax liabilities $ ( 1,569 ) $ ( 1,888 )

Income taxes payable, which is included in accrued expenses and other current liabilities on the consolidated balance sheets as of January 31, 2022 and 2023 were $ 0.0 million and $ 1.3 million, respectively.

The Company continually assesses the realizability of its deferred tax assets based on an evaluative process that considers all available positive and negative evidence.

3 unchanged sentences

On the Acquisition Date, the Company recorded net U.S.

deferred tax liabilities, most of which relate to identifiable intangible assets.

The Company evaluated this positive evidence and determined a portion of these deferred tax liabilities allow the Company to recognize $ 24.6 million of the Company’s U.S.

deferred tax assets, which results in a reduction

deferred tax liabilities, most of which relate to

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

of the valuation allowance.

identifiable finite-life intangible assets.

The Company evaluated this positive evidence and determined a portion of these deferred tax liabilities allow the Company to recognize $ 24.6 million of the Company’s U.S.

deferred tax assets, which results in a reduction of the valuation allowance.

In accordance with ASC 805-740-30-3, the Company reflected the reduction of the valuation allowance as a component of income tax provision (benefit) at the Acquisition Date, and during the fiscal year ended January 31, 2022.

25 unchanged sentences

However, amounts reported as net operating losses and tax credit carryforwards from these tax periods remain subject to review by most tax authorities.

The United States Tax Cuts and Job Act of 2017 (the “U.S.

Tax Legislation”) was enacted on December 22, 2017.

Tax Legislation significantly revised the United States tax code by, among other things, introducing a tax on foreign earnings in excess of a deemed return on tangible assets of foreign corporations (known as “GILTI”) for tax years beginning after December 31, 2017.

The guidance indicated that companies must make a policy election to either record deferred taxes for basis differences expected to reverse as a result of the GILTI provisions in future years or treat any taxes on GILTI inclusions as period costs when incurred.

The Company completed its analysis of the tax effects of the GILTI provisions as of January 31, 2023 and elected to account for these tax effects as period costs when incurred.

The Company recognizes the income tax benefits of any uncertain tax positions only when, based upon the technical merits of the position, it is more likely than not that the position is sustainable upon examination.

With the information available, the Company has performed an analysis and as of January 31, 2022 and 2023, the Company has not recognized any unrecognized tax benefits, interest or penalties for any income tax positions.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

Defined Contribution Plan

4 unchanged sentences

Employer contributions for the fiscal years ended January 31, 2021, 2022, and 2023 were $ 2.1 million, $ 3.2 million, and $ 7.0 million, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

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 the leases for up to five years .

The components of lease expense for the fiscal year ended January 31, 2022 were as follows:

The components of lease expense were as follows:

Fiscal Year Ended January 31,

Operating lease expense $ 2,945 $ 4,066

4 unchanged sentences

Cash paid for amounts included in the measurement of operating lease liabilities

Right-of-use assets obtained in exchange for operating lease liabilities 1,771

Operating right-of-use assets obtained in exchange for operating lease liabilities

Modification to reduce operating right-of-use assets and operating lease liabilities 842

The weighted-average remaining lease term and weighted-average discount rate for the Company's operating lease liabilities as of January 31, 2023 were 3.58 years and 4.5 %, respectively.

9 unchanged sentences

(In thousands, except share and per share amounts and unless otherwise indicated)

Future minimum lease payments as of January 31, 2021, prior to the Company's adoption of the new lease ASU, were as follows:

Fiscal Year Ending January 31, Operating Leases

Thereafter 2,544

Total lease liabilities $ 12,177

Revolving Credit Facility

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 at January 31, 2023 on the Company's 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.

As of January 31, 2023, unamortized debt issuance costs were $ 0.2 million and are included in other long-term assets.

As of January 31, 2023, the Company had $ 30.0 million outstanding and no letters of credit issued under the Credit Facility and was in compliance with all covenants.

As of January 31, 2023, the applicable interest rate was approximately 5.57 %.

The available borrowing capacity under the Credit Facility was $ 20.0 million as of January 31, 2023.

Commitments and Contingencies

2 unchanged sentences

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 and Construction Liabilities

The Company entered into a new lease agreement for the Company's headquarters in November 2020 with a new lessor.

The lease goes through 2035 with options to renew.

Due to a purchase option contained in the 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 the lease.

Upon expiration of the purchase option in the lease, the lease will be analyzed for applicable lease accounting.

Financing Obligations

The Company entered into a lease agreement for the Company's headquarters in November 2020 in connection with the 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

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 financing obligation are included in property and equipment, net and financing obligations on the consolidated balance sheets, respectively.

In January 2021, the Company entered into an agreement for a parking deck which is an addition to the Company's existing headquarters building.

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 consolidated balance sheets, respectively.

Upon expiration of the purchase option in the lease, the lease will be analyzed for applicable lease accounting.

In April 2021, the Company entered into a new lease agreement for the construction of an additional office building that is on the property of the Company's existing headquarters.

Due to the Company also being deemed to be the owner of the additional building for accounting purposes, the costs associated with the construction of the building will be capitalized as construction in progress with a corresponding construction liability through construction which is estimated to be approximately $ 24.0 million.

Upon completion of the building, the construction liability will be recorded as a financing obligation.

Upon expiration of the purchase option in the lease, the lease will be analyzed for applicable lease accounting.

The costs of the construction in progress and corresponding construction liability are included in property and equipment, net and construction liability, noncurrent on the consolidated balance sheets, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

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 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 January 31, 2023 is as follows:

4 unchanged sentences

2027 1,102 3,950

2027 1,104 2,996

Thereafter — —

3 unchanged sentences

Financing obligations $ 55,380

A portion of the 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 January 31, 2023 was 5.7 %.

Indemnification

1 unchanged sentence

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.

It is not possible to determine the maximum potential loss under these indemnification provisions due to the Company’s limited history of prior

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

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 consolidated financial statements.

1 unchanged sentence

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 is seeking documents and information in connection with an investigation of the Company’s hiring and wage practices under U.S.

federal antitrust laws.

The Company has retained outside counsel and is fully cooperating with the authorities.

Although there can be no assurance with respect to the outcome of this matter, the Company believes its hiring and wage practices do not violate antitrust laws.

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 US 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 this 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").

5 unchanged sentences

The complaint does not allege any specific damages.

On November 23, 2021, the District Court approved preliminary 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.

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.

Although there can be no assurance with respect to the outcome of this matter, the Company believes the alleged claims are not meritorious and intends to defend itself vigorously.

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.

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.

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

Given the uncertainty and preliminary stages of these matters, 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 matters in the consolidated financial statements.

Other Commitments and Contingencies

The Company may be subject to audits by tax authorities in jurisdictions where it conducts business.

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

Related-Party Transactions

The Company’s largest vendor is also an equityholder in the Company.

Total payments related to the agreement are disclosed in Note 9 "Reseller Agreement".

The Company also purchases services to assist in managing its own sales cycle, customer relationship management, and other business functions.

Total payments related to the reseller agreement with this party are disclosed in Note 9 "Reseller Agreement." The Company also purchases services from this party to assist in managing its own sales cycle, customer relationship management, and other business functions.

The Company has a non-cancellable agreement for the purchase of services.

In December 2022, this agreement was renewed for one year and expires in December 2023.

Total payments for these services recorded to expenses were $ 1.1 million, $ 1.2 million, and $ 1.5 million for the fiscal years ended January 31, 2020, 2021, and 2022, respectively and $ 1.3 million and $ 0.0 million were in prepaid expenses and other current assets as a related party as of January 31, 2021 and January 31, 2022, respectively.

Accounts payable as a related party were $ 4.4 million and $ 0.0 million at January 31, 2021 and January 31, 2022, respectively, included in accounts payable, related parties.

Based solely on information reported in a Schedule 13G/A filed with the SEC on February 11, 2022 this vendor is no longer considered a related party as of December 31, 2021.

The expenses presented above includes expenses while the vendor was considered a related party.

The vendor was a related party for a portion of the year ended January 31, 2022 and was no longer a related party as of January 31, 2022.

Based solely on information reported in a Schedule 13G/A filed with the SEC on February 11, 2022, this vendor is no longer considered a related party as of December 31, 2021, and the amounts disclosed related to them are accordingly presented while the vendor was considered a related party.

The vendor was considered a related party for a portion of the year ended January 31, 2022 and was no longer considered a related party as of January 31, 2022.

The Company continues to do business with the vendor and balances at January 31, 2022 are no longer presented as related party.

Total payments for these services recorded to expenses were $ 1.2 million and $ 1.5 million for the fiscal years ended January 31, 2021 and 2022, respectively.

In the quarter ended July 31, 2020, certain equityholders ceased to qualify as related parties of the Company and the amounts disclosed related to them are accordingly presented only while they were considered a related party.

Included in revenues from three equityholders, who are also customers of the Company, is $ 8.4 million, $ 2.8 million, and $ 0.0 million for the fiscal years ended January 31, 2020, 2021, and 2022, respectively.

Included in revenues from three equityholders, who are also customers of the Company, was $ 2.8 million for the fiscal year ended January 31, 2021.

The Company has a banking relationship with one of its former equityholders who was considered a related party.

In the quarter ended July 31, 2020, the equityholder ceased to qualify as a related party of the Company and the amounts disclosed related to such former equityholder are accordingly presented only while they were considered a related party.

Included in interest income is $ 0.7 million, $ 0.1 million, and $ 0.0 million for the fiscal years ended January 31, 2020, 2021, and 2022, respectively.

The Company entered into an agreement with one of its equityholders in May 2016 to spend an agreed-upon amount of funds over a three-year period to further the alliance between the two companies.

In April 2019, the agreement was extended for an additional three years .

As of January 31, 2022, the Company was in compliance with the terms of the agreement.

In the quarter ended July 31, 2020, the equityholder ceased to qualify as a related party of the Company and the amounts disclosed related to such equityholder are accordingly presented only while they were considered a related party.

For the fiscal years ended January 31, 2020, 2021, and 2022, $ 0.06 million, $ 0.0 million, and $ 0.0 million was spent, respectively.

The Company entered into a Merger Agreement, as disclosed in Note 1 "Organization and Description of Business" and Note 7 "Business Combinations." Affiliates of Insight Partners are equityholders of SimpleNexus and certain other parties in connection with the Merger Agreement transaction, and other affiliates of Insight Partners are currently significant stockholders of the Company.

Included in interest income is $ 0.1 million for the fiscal year ended January 31, 2021.

The Company entered into the Merger Agreement on January 7, 2022, as disclosed in Note 1 "Organization and Description of Business" and Note 7 "Business Combinations." Affiliates of Insight Partners were equityholders of SimpleNexus and certain other parties in connection with the Merger Agreement transaction, and other affiliates of Insight Partners are currently significant stockholders of the Company.

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.

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.

Basic and Diluted Loss per Share

3 unchanged sentences

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 fiscal years ended January 31, 2020, 2021, and 2022 is

Diluted loss per share for the fiscal years ended January 31, 2021, 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

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):

7 unchanged sentences

$ ( 0.46 ) $ ( 0.51 ) $ ( 0.93 )

The weighted-average number of shares outstanding used in the computation of diluted loss per share does not include the effect of the following potential outstanding common stock because the effect would have been anti-dilutive:

The following potential outstanding common stock were excluded from the diluted loss per share computation because the effect would have been anti-dilutive:

Fiscal Year Ended January 31,

3 unchanged sentences

Shares issuable pursuant to the ESPP — 12,471 21,079

Subsequent Events

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.

Restructuring

On January 18, 2023, the Company announced a workforce reduction of approximately seven percent 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 are 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.

The Company incurred charges in the fourth quarter of the Company’s fiscal 2023 of $ 4.8 million in connection with the restructuring plan.

As of January 31, 2023, 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 and is expected to be paid in the first quarter of the Company’s fiscal 2024.

The Company had no restructuring charges for the fiscal years ended January 31, 2021 and 2022.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and unless otherwise indicated)

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.

In February 2022, the Company borrowed $ 20.0 million under the Credit Facility.

On February 1, 2022, the Company granted 1,355,616 RSUs to the Company's employees, including executive officers.

The Company expects to recognize stock-based compensation expense of $ 63.5 million related to the RSUs over a weighted average period of 4.0 years.

The Company’s restructuring charges for the fiscal year ended January 31, 2023 were as follows:

Fiscal Year Ended January 31, 2023

Severance and other employee costs Stock-based compensation (benefit) Lease exit fees 1

Cost of subscription revenues $ — $ — $ 4 $ 4

Cost of professional services and other revenues 324 ( 9 ) 9 324

Sales and marketing 1,324 ( 31 ) 9 1,302

Research and development 2,105 ( 141 ) 30 1,994

General and administrative 1,210 ( 29 ) 2 1,183

Total $ 4,963 $ ( 210 ) $ 54 $ 4,807

1 These expenses reduced operating lease right-of-use assets on the consolidated balance sheets.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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-K

Item 8. Financial Statements and Supplementary Data