nCino, Inc. 10-Q

Item 1. Financial Statements nCino, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) January 31, 2023 July 31, 2023 (Unaudited) Assets Current assets Cash and cash equivalents (VIE: $ 2,019 and $ 1,081 at January 31, 2023 and July 31, 2023, respectively) $ 82,036 $ 98,003 Accounts receivable, less allowances of $ 899 and $ 876 at January 31, 2023 and July 31, 2023, respectively 99,497 80,901 Costs capitalized to obtain revenue contracts, current portion, net 9,386 9,495 Prepaid expenses and other current assets 16,274 20,976 Total current assets 207,193 209,375 Property and equipment, net 84,442 81,938 Operating lease right-of-use assets, net 10,508 8,232 Costs capitalized to obtain revenue contracts, noncurrent, net 18,229 16,263 Goodwill 839,440 839,042 Intangible assets, net 152,825 138,655 Investments (related party $ 2,500 at January 31, 2023 and July 31, 2023) 6,531 6,531 Long-term prepaid expenses and other assets 8,101 1,579 Total assets $ 1,327,269 $ 1,301,615 Liabilities, redeemable non-controlling interest, and stockholders’ equity Current liabilities Accounts payable $ 11,878 $ 9,783 Accrued compensation and benefits 22,623 12,385 Accrued expenses and other current liabilities 10,897 11,995 Deferred revenue, current portion 154,871 169,314 Financing obligations, current portion 1,015 1,384 Operating lease liabilities, current portion 3,874 3,446 Total current liabilities 205,158 208,307 Operating lease liabilities, noncurrent 7,282 5,821 Deferred income taxes, noncurrent 2,797 2,919 Revolving credit facility, noncurrent 30,000 — Financing obligations, noncurrent 54,365 53,432 Total liabilities 299,602 270,479 Commitments and contingencies (Note 12) Redeemable non-controlling interest (Note 3) 3,589 2,995 Stockholders’ equity Preferred stock, $ 0.001 par value; 10,000,000 shares authorized, and none issued and outstanding as of January 31, 2023 and July 31, 2023 — — Common stock, $ 0.0005 par value; 500,000,000 shares authorized as of January 31, 2023 and July 31, 2023; 111,424,132 and 112,661,660 shares issued and outstanding as of January 31, 2023 and July 31, 2023, respectively 56 56 Additional paid-in capital 1,333,669 1,364,757 Accumulated other comprehensive income 694 844 Accumulated deficit ( 310,341 ) ( 337,516 ) Total stockholders’ equity 1,024,078 1,028,141 Total liabilities, redeemable non-controlling interest, and stockholders’ equity $ 1,327,269 $ 1,301,615 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements . 1 Table of Contents nCino, Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share data) (Unaudited) Three Months Ended July 31, Six Months Ended July 31, 2022 2023 2022 2023 Revenues Subscription $ 84,445 $ 99,897 $ 163,634 $ 197,237 Professional services and other 15,182 17,339 30,204 33,671 Total revenues 99,627 117,236 193,838 230,908 Cost of revenues Subscription 26,145 29,719 51,655 58,876 Professional services and other 15,076 18,328 29,868 35,359 Total cost of revenues 41,221 48,047 81,523 94,235 Gross profit 58,406 69,189 112,315 136,673 Operating expenses Sales and marketing 32,512 32,164 61,851 62,105 Research and development 29,701 29,889 58,816 58,084 General and administrative 21,199 21,930 43,885 39,905 Total operating expenses 83,412 83,983 164,552 160,094 Loss from operations ( 25,006 ) ( 14,794 ) ( 52,237 ) ( 23,421 ) Non-operating income (expense) Interest income 26 835 28 1,372 Interest expense ( 631 ) ( 1,044 ) ( 1,269 ) ( 2,423 ) Other income (expense), net ( 1,014 ) 469 ( 2,587 ) ( 313 ) Loss before income taxes ( 26,625 ) ( 14,534 ) ( 56,065 ) ( 24,785 ) Income tax provision 799 1,545 1,362 2,938 Net loss ( 27,424 ) ( 16,079 ) ( 57,427 ) ( 27,723 ) Net loss attributable to redeemable non-controlling interest (Note 3) ( 307 ) ( 268 ) ( 651 ) ( 548 ) Adjustment attributable to redeemable non-controlling interest (Note 3) 128 73 1,157 ( 48 ) Net loss attributable to nCino, Inc. $ ( 27,245 ) $ ( 15,884 ) $ ( 57,933 ) $ ( 27,127 ) Net loss per share attributable to nCino, Inc.: Basic and diluted $ ( 0.25 ) $ ( 0.14 ) $ ( 0.53 ) $ ( 0.24 ) Weighted average number of common shares outstanding: Basic and diluted 110,391,865 112,396,716 110,198,509 112,262,527 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements . 2 Table of Contents nCino, Inc. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (In thousands) (Unaudited) Three Months Ended July 31, Six Months Ended July 31, 2022 2023 2022 2023 Net loss $ ( 27,424 ) $ ( 16,079 ) $ ( 57,427 ) $ ( 27,723 ) Other comprehensive income: Foreign currency translation 429 26 1,109 140 Other comprehensive income 429 26 1,109 140 Comprehensive loss ( 26,995 ) ( 16,053 ) ( 56,318 ) ( 27,583 ) Less comprehensive loss attributable to redeemable non-controlling interest: Net loss attributable to redeemable non-controlling interest ( 307 ) ( 268 ) ( 651 ) ( 548 ) Foreign currency translation attributable to redeemable non-controlling interest ( 28 ) — ( 182 ) ( 10 ) Comprehensive loss attributable to redeemable non-controlling interest ( 335 ) ( 268 ) ( 833 ) ( 558 ) Comprehensive loss attributable to nCino, Inc. $ ( 26,660 ) $ ( 15,785 ) $ ( 55,485 ) $ ( 27,025 ) The accompanying notes are an integral part of these unaudited condensed consolidated financial statements . 3 Table of Contents nCino, Inc. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (In thousands, except share data) (Unaudited) Three Months Ended July 31, 2022 Common Stock Additional Paid-in Capital Other Comprehensive Income (Loss) Accumulated Deficit Total Shares Amount Balance, April 30, 2022 110,128,561 $ 55 $ 1,290,295 $ 762 $ ( 239,275 ) $ 1,051,837 Exercise of stock options 148,419 — 1,084 — — 1,084 Stock issuance upon vesting of restricted stock units 246,834 — — — — — Stock issuance under the employee stock purchase plan 92,236 — 2,424 — — 2,424 Stock-based compensation — — 12,664 — — 12,664 Other comprehensive income — — — 457 — 457 Net loss attributable to nCino, Inc., including adjustment to redeemable non-controlling interest — — ( 128 ) — ( 27,117 ) ( 27,245 ) Balance, July 31, 2022 110,616,050 $ 55 $ 1,306,339 $ 1,219 $ ( 266,392 ) $ 1,041,221 Three Months Ended July 31, 2023 Common Stock Additional Paid-in Capital Other Comprehensive Income (Loss) Accumulated Deficit Total Shares Amount Balance, April 30, 2023 112,200,481 $ 56 $ 1,346,250 $ 818 $ ( 321,705 ) $ 1,025,419 Exercise of stock options 93,150 — 607 — — 607 Stock issuance upon vesting of restricted stock units 247,945 — — — — — Stock issuance under the employee stock purchase plan 120,084 — 2,698 — — 2,698 Stock-based compensation — — 15,275 — — 15,275 Other comprehensive income — — — 26 — 26 Net loss attributable to nCino, Inc., including adjustment to redeemable non-controlling interest — — ( 73 ) — ( 15,811 ) ( 15,884 ) Balance, July 31, 2023 112,661,660 $ 56 $ 1,364,757 $ 844 $ ( 337,516 ) $ 1,028,141 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements . 4 Table of Contents nCino, Inc. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (In thousands, except share data) (Unaudited) Six Months Ended July 31, 2022 Common Stock Additional Paid-in Capital Other Comprehensive Income (Loss) Accumulated Deficit Total Shares Amount Balance, January 31, 2022 109,778,542 $ 55 $ 1,277,258 $ ( 72 ) $ ( 209,616 ) $ 1,067,625 Exercise of stock options 305,394 — 1,856 — — 1,856 Stock issuance upon vesting of restricted stock units 439,878 — — — — — Stock issuance under the employee stock purchase plan 92,236 — 2,424 — — 2,424 Stock-based compensation — — 25,958 — — 25,958 Other comprehensive income — — — 1,291 — 1,291 Net loss attributable to nCino, Inc., including adjustment to redeemable non-controlling interest — — ( 1,157 ) — ( 56,776 ) ( 57,933 ) Balance, July 31, 2022 110,616,050 $ 55 $ 1,306,339 $ 1,219 $ ( 266,392 ) $ 1,041,221 Six Months Ended July 31, 2023 Common Stock Additional Paid-in Capital Other Comprehensive Income (Loss) Accumulated Deficit Total Shares Amount Balance, January 31, 2023 111,424,132 $ 56 $ 1,333,669 $ 694 $ ( 310,341 ) $ 1,024,078 Exercise of stock options 340,668 — 2,208 — — 2,208 Stock issuance upon vesting of restricted stock units 776,776 — — — — — Stock issuance under the employee stock purchase plan 120,084 — 2,698 — — 2,698 Stock-based compensation — — 26,134 — — 26,134 Other comprehensive income — — — 150 — 150 Net loss attributable to nCino, Inc., including adjustment to redeemable non-controlling interest — — 48 — ( 27,175 ) ( 27,127 ) Balance, July 31, 2023 112,661,660 $ 56 $ 1,364,757 $ 844 $ ( 337,516 ) $ 1,028,141 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements . 5 Table of Contents nCino, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Six Months Ended July 31, 2022 2023 Cash flows from operating activities Net loss attributable to nCino, Inc. $ ( 57,933 ) $ ( 27,127 ) Net loss and adjustment attributable to redeemable non-controlling interest 506 ( 596 ) Net loss ( 57,427 ) ( 27,723 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 16,882 18,297 Non-cash operating lease costs 2,001 2,421 Amortization of costs capitalized to obtain revenue contracts 4,031 4,869 Amortization of debt issuance costs 85 92 Stock-based compensation 25,971 26,146 Deferred income taxes 480 790 Provision for bad debt 154 756 Net foreign currency losses (gains) 2,635 ( 38 ) Loss on disposal of property and equipment — 144 Change in operating assets and liabilities: Accounts receivable 5,415 18,446 Costs capitalized to obtain revenue contracts ( 4,571 ) ( 3,002 ) Prepaid expenses and other assets ( 1,651 ) 1,051 Accounts payable ( 1,890 ) ( 1,406 ) Accrued expenses and other current liabilities ( 9,653 ) ( 9,313 ) Deferred revenue 30,327 13,772 Operating lease liabilities ( 2,070 ) ( 2,035 ) Net cash provided by operating activities 10,719 43,267 Cash flows from investing activities Acquisition of assets — ( 356 ) Purchases of property and equipment ( 9,303 ) ( 2,464 ) Net cash used in investing activities ( 9,303 ) ( 2,820 ) Cash flows from financing activities Proceeds from borrowings on revolving credit facility 20,000 — Payments on revolving credit facility ( 20,000 ) ( 30,000 ) Payments of debt issuance costs ( 367 ) — Exercise of stock options 1,856 2,204 Stock issuance under the employee stock purchase plan 2,424 2,698 Principal payments on financing obligations ( 303 ) ( 564 ) Net cash provided by (used in) financing activities 3,610 ( 25,662 ) Effect of foreign currency exchange rate changes on cash, cash equivalents, and restricted cash ( 1,895 ) 1,166 Net increase in cash, cash equivalents, and restricted cash 3,131 15,951 Cash, cash equivalents, and restricted cash, beginning of period 88,399 87,418 Cash, cash equivalents, and restricted cash, end of period $ 91,530 $ 103,369 Reconciliation of cash, cash equivalents, and restricted cash, end of period: Cash and cash equivalents $ 86,148 $ 98,003 Restricted cash included in prepaid expenses and other current assets — 5,162 Restricted cash included in other long-term assets 5,382 204 Total cash, cash equivalents, and restricted cash, end of period $ 91,530 $ 103,369 Supplemental disclosure of cash flow information Cash paid for taxes, net of refunds $ 484 $ 1,906 Cash paid for interest $ 1,237 $ 2,580 Supplemental disclosure of noncash investing and financing activities Purchase of property and equipment, accrued but not paid $ 7,359 $ 29 Receivables from exercise of stock options $ — $ 4 Net working capital receivable adjustment $ 676 $ — The accompanying notes are an integral part of these unaudited condensed consolidated financial statements . 6 Table of Contents nCino, Inc. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share and per share amounts and unless otherwise indicated) Note 1. Organization and Description of Business Organization: On November 16, 2021, nCino, Inc. (now nCino OpCo, Inc., "nCino OpCo") entered into an Agreement and Plan of Merger (the "Merger Agreement") with Penny HoldCo, Inc. (now nCino, Inc., "nCino, Inc."), a Delaware corporation incorporated on November 12, 2021 as a wholly-owned subsidiary of nCino OpCo, and certain other parties. On January 7, 2022, in connection with the closing of the transactions contemplated by the Merger Agreement, Penny HoldCo, Inc. changed its name to nCino, Inc. and nCino, Inc. changed its name to nCino OpCo, Inc. and became a wholly-owned subsidiary of nCino, Inc. Merger: On January 7, 2022, pursuant to the Merger Agreement, nCino, Inc. and nCino OpCo completed a series of mergers in which nCino, Inc. became the parent of nCino OpCo and SimpleNexus, LLC ("SimpleNexus"). Each share of nCino OpCo common stock, par value $ 0.0005 per share, issued and outstanding was converted into one fully paid and nonassessable share of nCino, Inc. common stock, par value $ 0.0005 . nCino, Inc. became the successor issuer and reporting company to nCino OpCo pursuant to Rule 12g-3(a) under the Securities Exchange Act of 1934, as amended. On January 10, 2022, shares of nCino OpCo were suspended from trading on the Nasdaq Global Select Market, and shares of nCino, Inc. commenced using nCino OpCo's trading history under the ticker symbol "NCNO". Description of Business: The Company is a software-as-a-service ("SaaS") company that provides software applications to financial institutions to streamline employee and client interactions. The Company is headquartered in Wilmington, North Carolina and has various locations in the U.S., North America, Europe and Asia Pacific. Fiscal Year End: The Company’s fiscal year ends on January 31. Note 2. Summary of Significant Accounting Policies Principles of Consolidation and Basis of Presentation: The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") as set forth in the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") and applicable rules and regulations of the Securities Exchange Commission ("SEC") regarding interim financial reporting. Certain information and disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2023 filed with the SEC on March 28, 2023. The unaudited condensed consolidated financial statements include accounts of the Company’s wholly-owned subsidiaries, as well as a variable interest entity in which the Company is the primary beneficiary. All intercompany accounts and transactions are eliminated. The Company is subject to the normal risks associated with technology companies that have not demonstrated sustainable income from operations, including product development, the risk of customer acceptance and market penetration of its products and services and, ultimately, the need to attain profitability to generate positive cash resources. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal 2024 or any future period. Variable Interest Entity: The Company holds an interest in a Japanese company (“nCino K.K.”) that is considered a variable interest entity ("VIE"). nCino K.K. is considered a VIE as it has insufficient equity capital to finance its activities without additional financial support. The Company is the primary beneficiary of nCino K.K. as it has the power over the activities that most significantly impact the economic performance of nCino K.K. and has the obligation to absorb expected 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 7 Table of Contents nCino, Inc. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share and per share amounts and unless otherwise indicated) 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 unaudited condensed consolidated balance sheets. See Note 3 "Variable Interest Entity and Redeemable Non-Controlling Interest" for additional information regarding the Company’s variable interest. Redeemable Non-Controlling Interest: Redeemable non-controlling interest relates to minority investors of nCino K.K. An agreement with the minority investors of nCino K.K. contains redemption features whereby the interest held by the minority investors are redeemable either at the option of the (i) minority investors or (ii) the Company, both beginning on the eighth anniversary of the initial capital contribution. If the interest of the minority investors were to be redeemed under this agreement, the Company would be required to redeem the interest based on a prescribed formula derived from the relative revenues of nCino K.K. and the Company. The balance of the redeemable non-controlling interest is reported at the greater of the initial carrying amount adjusted for the redeemable non-controlling interest’s share of earnings or losses and other comprehensive income or loss, or its estimated redemption value. The resulting changes in the estimated redemption amount (increases or decreases) are recorded with corresponding adjustments against retained earnings or, in the absence of retained earnings, additional paid-in-capital. These interests are presented on the unaudited condensed consolidated balance sheets outside of equity under the caption “Redeemable non-controlling interest.” Use of Estimates: The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions made by the Company’s management are used for, but not limited to, revenue recognition including determining the nature and timing of satisfaction of performance obligations, variable consideration, and stand-alone selling price; the average period of benefit associated with costs capitalized to obtain revenue contracts; fair value of assets acquired and liabilities assumed for business combinations; the useful lives of intangible assets; income taxes and the related valuation allowance on deferred tax assets; redemption value of redeemable non-controlling interest; and stock-based compensation. The Company assesses these estimates on a regular basis using historical experience and other factors. Actual results could differ from these estimates. Concentration of Credit Risk and Significant Customers: The Company’s financial instruments that are exposed to concentration of credit risk consist primarily of cash, cash equivalents, restricted cash and accounts receivable. The Company’s cash and cash equivalents exceeded federally insured limits at January 31, 2023 and July 31, 2023. The Company maintains its cash, cash equivalents and restricted cash with high-credit-quality financial institutions. As of January 31, 2023, no individual customer represented over 10% of accounts receivable and, as of July 31, 2023, one individual customer represented 10.5 % of accounts receivable. For the three and six months ended July 31, 2022 and 2023, no individual customer represented more than 10% of the Company’s total revenues. Restricted Cash: Restricted cash primarily consists of a minimum cash balance the Company maintains with a lender under the Company's revolving credit facility. The remaining restricted cash consists of deposits held as collateral for the Company's bank guarantees issued in place of security deposits for certain property leases and credit cards. Restricted cash is included in prepaid expenses and other current assets and other long-term assets at January 31, 2023 and July 31, 2023 on the unaudited condensed consolidated balance sheets. Accounts Receivable and Allowances: A receivable is recorded when an unconditional right to invoice and receive payment exists, such that only the passage of time is required before payment of consideration is due. Timing of revenue recognition may differ from the timing of invoicing to customers. Certain performance obligations may require payment before delivery of the service to the customer. The Company recognizes a contract asset in the form of accounts receivable when the Company has an unconditional right to payment, and the Company records a contract asset in the form of unbilled accounts receivable when revenues earned on a contract exceeds the billings. The Company’s standard billing terms are annual in advance, while SimpleNexus' standard billing terms are monthly in advance. An unbilled accounts receivable is a contract asset related to the delivery of the Company’s subscription services and professional services for which the related billings will occur in a future period. Unbilled accounts receivable consists of (i) revenues recognized for professional services 8 Table of Contents nCino, Inc. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share and per share amounts and unless otherwise indicated) performed but not yet billed and (ii) revenues recognized from non-cancelable, multi-year orders in which fees increase annually but for which the Company is not contractually able to invoice until a future period. Accounts receivable are reported at their gross outstanding balance reduced by an allowance for estimated receivable losses, which includes allowances for doubtful accounts and a reserve for expected credit losses. The Company records allowances for doubtful accounts based upon the credit worthiness of customers, historical experience, the age of the accounts receivable, current market and economic conditions, and supportable forecasts about the future. Relevant risk characteristics include customer size and historical loss patterns. This estimate is analyzed quarterly and adjusted as necessary. A summary of activity in the allowance for doubtful accounts is as follows: Three Months Ended July 31, Six Months Ended July 31, 2022 2023 2022 2023 Balance, beginning of period $ 166 $ 1,037 $ 151 $ 899 Charged to bad debt expense 138 458 154 756 Write-offs and other — ( 622 ) — ( 779 ) Translation adjustments ( 3 ) 3 ( 4 ) — Balance, end of period $ 301 $ 876 $ 301 $ 876 Investments : The Company's investments are non-marketable equity investments without readily determinable fair value and for which the Company does not have control or significant influence. The investments are measured at cost with adjustments for observable changes in price or impairment as permitted by the measurement alternative. The Company assesses at each reporting period if the investments continue to qualify for the measurement alternative. Gains or losses resulting from observable price changes are recognized currently in the Company's unaudited condensed consolidated statements of operations. The Company assesses the investments whenever events or changes in circumstances indicate that the carrying value of the investments may not be recoverable. Note 3. Variable Interest Entity and Redeemable Non-Controlling Interest In October 2019, the Company entered into an agreement with Japan Cloud Computing, L.P. and M30 LLC (collectively, the “Investors”) to engage in the investment, organization, management, and operation of nCino K.K. that is focused on the distribution of the Company’s products in Japan. In October 2019, the Company initially contributed $ 4.7 million in cash in exchange for 51 % of the outstanding common stock of nCino K.K. As of July 31, 2023, the Company controls a majority of the outstanding common stock in nCino K.K. All of the common stock held by the Investors is callable by the Company or puttable by the Investors at the option of the Investors or at the option of the Company beginning on the eighth anniversary of the agreement with the Investors. Should the call or put option be exercised, the redemption value would be determined based on a prescribed formula derived from the discrete revenues of nCino K.K. and the Company and may be settled, at the Company’s discretion, with Company stock or cash or a combination of the foregoing. As a result of the put right available to the Investors, the redeemable non-controlling interests in nCino K.K. are classified outside of permanent equity in the Company’s unaudited condensed consolidated balance sheets. The estimated redemption value of the call/put option embedded in the redeemable non-controlling interest was $ 3.2 million at July 31, 2023. 9 Table of Contents nCino, Inc. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share and per share amounts and unless otherwise indicated) The following table summarizes the activity in the redeemable non-controlling interests for the period indicated below: Three Months Ended July 31, Six Months Ended July 31, 2022 2023 2022 2023 Balance, beginning of period $ 3,419 $ 3,184 $ 2,882 $ 3,589 Net loss attributable to redeemable non-controlling interest (excluding adjustment to non-controlling interest) ( 307 ) ( 268 ) ( 651 ) ( 548 ) Foreign currency translation ( 28 ) — ( 182 ) ( 10 ) Adjustment to redeemable non-controlling interest 128 73 1,157 ( 48 ) Stock-based compensation expense 1 7 6 13 12 Balance, end of period $ 3,219 $ 2,995 $ 3,219 $ 2,995 1 nCino K.K. stock options granted in accordance with nCino K.K.'s equity incentive plan. Note 4. Fair Value Measurements Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis The Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: Level 1. Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2. Significant other inputs that are directly or indirectly observable in the marketplace. Level 3. Significant unobservable inputs which are supported by little or no market activity. The carrying amounts of cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value as of January 31, 2023 and July 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, 2023 and July 31, 2023 and indicates the fair value hierarchy of the valuation: Fair value measurements on a recurring basis as of January 31, 2023 Level 1 Level 2 Level 3 Assets: Money market accounts (included in cash and cash equivalents) $ 17,149 $ — $ — Time deposits (included in other long-term assets) 382 — — Total assets $ 17,531 $ — $ — 10 Table of Contents nCino, Inc. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share and per share amounts and unless otherwise indicated) Fair value measurements on a recurring basis as of July 31, 2023 Level 1 Level 2 Level 3 Assets: Money market accounts (included in cash and cash equivalents) $ 59,067 $ — $ — Time deposits (included in prepaid expenses and other current assets) 162 — — Time deposits (included in other long-term assets) 204 — — Total assets $ 59,433 $ — $ — All of the Company’s money market accounts are classified within Level 1 because the Company’s money market accounts are valued using quoted market prices in active exchange markets including identical assets. Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis The Company's assets measured at fair value on a nonrecurring basis include the investments accounted for under the measurement alternative. There was no adjustment or impairment recognized for the three and six months ended July 31, 2022 and 2023, respectively. Note 5. Revenues Revenues by Geographic Area Revenues by geographic region were as follows: Three Months Ended July 31, Six Months Ended July 31, 2022 2023 2022 2023 United States $ 84,678 $ 95,315 $ 164,607 $ 189,761 International 14,949 21,921 29,231 41,147 $ 99,627 $ 117,236 $ 193,838 $ 230,908 The Company disaggregates its revenues from contracts with customers by geographic location. Revenues by geography are determined based on the region of the Company’s contracting entity, which may be different than the region of the customer. No country outside the United States represented 10% or more of total revenues. Contract Amounts Accounts Receivable Accounts receivable, less allowance for doubtful accounts, is as follows as of January 31, 2023 and July 31, 2023: As of January 31, 2023 As of July 31, 2023 Trade accounts receivable $ 94,729 $ 74,570 Unbilled accounts receivable 4,920 6,386 Allowance for doubtful accounts ( 899 ) ( 876 ) Other accounts receivable 1 747 821 Total accounts receivable, net $ 99,497 $ 80,901 1 Includes $ 0.1 million and $ 0.3 million income tax receivable of as of January 31, 2023 and July 31, 2023, respectively. 11 Table of Contents nCino, Inc. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share and per share amounts and unless otherwise indicated) Deferred Revenue and Remaining Performance Obligations Significant movements in the deferred revenue balance during the period consisted of increases due to payments received or due in advance prior to the transfer of control of the underlying performance obligations to the customer, which were offset by decreases due to revenues recognized in the period. During the six months ended July 31, 2023, $ 117.2 million of revenues were recognized out of the deferred revenue balance as of January 31, 2023. Transaction price allocated to remaining performance obligations represents contracted revenues that have not yet been recognized, which includes both deferred revenue and amounts that will be invoiced and recognized as revenues in future periods. Transaction price allocated to the remaining performance obligation is influenced by several factors, including the timing of renewals, average contract terms, and foreign currency exchange rates. The Company applies practical expedients to exclude amounts related to performance obligations that are billed and recognized as they are delivered, optional purchases that do not represent material rights, and any estimated amounts of variable consideration that are subject to constraint. Remaining performance obligations were $ 928.6 million as of July 31, 2023. The Company expects to recognize approximately 69 % of its remaining performance obligation as revenues in the next 24 months, approximately 28 % more in the following 25 to 48 months, and the remainder thereafter. Note 6. Property and Equipment Property and equipment, net consisted of the following: As of January 31, 2023 As of July 31, 2023 Furniture and fixtures $ 10,730 $ 12,017 Computers and equipment 8,361 8,231 Buildings and land 1 56,379 56,379 Leasehold improvements 28,702 28,738 Construction in progress 673 46 104,845 105,411 Less accumulated depreciation ( 20,403 ) ( 23,473 ) $ 84,442 $ 81,938 1 See Note 12 "Commitments and Contingencies." The Company recognized depreciation expense as follows: Three Months Ended July 31, Six Months Ended July 31, 2022 2023 2022 2023 Cost of subscription revenues $ 86 $ 150 $ 176 $ 287 Cost of professional services and other revenues 268 474 541 918 Sales and marketing 316 445 642 884 Research and development 535 747 1,084 1,470 General and administrative 189 306 378 589 Total depreciation expense $ 1,394 $ 2,122 $ 2,821 $ 4,148 12 Table of Contents nCino, Inc. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share and per share amounts and unless otherwise indicated) Note 7. Goodwill and Intangible Assets Goodwill The change in the carrying amounts of goodwill was as follows: Balance, January 31, 2023 $ 839,440 Translation adjustments ( 398 ) Balance, July 31, 2023 $ 839,042 Intangible assets Intangible assets, net are as follows: As of January 31, 2023 As of July 31, 2023 Gross Amount Accumulated Amortization Net Carrying Amount Gross Amount Accumulated Amortization Net Carrying Amount Developed technology $ 83,605 $ ( 21,818 ) $ 61,787 $ 83,509 $ ( 30,182 ) $ 53,327 Customer relationships 91,710 ( 13,418 ) 78,292 91,706 ( 17,751 ) 73,955 Trademarks and trade name 14,626 ( 2,705 ) 11,921 14,625 ( 3,912 ) 10,713 Other 919 ( 94 ) 825 919 ( 259 ) 660 $ 190,860 $ ( 38,035 ) $ 152,825 $ 190,759 $ ( 52,104 ) $ 138,655 The Company recognized amortization expense for intangible assets as follows: Three Months Ended July 31, Six Months Ended July 31, 2022 2023 2022 2023 Cost of subscription revenues $ 4,256 $ 4,190 $ 8,518 $ 8,441 Cost of professional services and other revenues — 83 — 165 Sales and marketing 2,772 2,771 5,543 5,543 Total amortization expense $ 7,028 $ 7,044 $ 14,061 $ 14,149 The expected future amortization expense for intangible assets as of July 31, 2023 is as follows: Fiscal Year Ending January 31, 2024 (remaining) $ 13,577 2025 26,916 2026 26,751 2027 25,544 2028 10,924 Thereafter 34,943 $ 138,655 The expected amortization expense is an estimate. Actual amounts of amortization expense may differ from estimated amounts due to additional intangible asset acquisitions, changes in foreign currency exchange rates, impairment of intangible assets, future changes to expected asset lives of intangible assets, and other events. 13 Table of Contents nCino, Inc. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share and per share amounts and unless otherwise indicated) Note 8. Stockholders’ Equity At July 31, 2023, the Company committed a total of 35,202,345 shares of common stock for future issuance as follows: Issued and outstanding stock options 1,664,830 Nonvested issued and outstanding restricted stock units ("RSUs") 5,784,062 Possible issuance under stock plans 27,753,453 35,202,345 Note 9. Stock-Based Compensation Stock Options Stock option activity for the six months ended July 31, 2023 was as follows: Number of Shares Weighted Average Exercise Price Outstanding, January 31, 2023 2,009,323 $ 6.62 Granted — — Expired or forfeited ( 3,825 ) 18.62 Exercised ( 340,668 ) 6.48 Outstanding, July 31, 2023 1,664,830 $ 6.62 Exercisable, July 31, 2023 1,655,080 $ 6.53 Fully vested or expected to vest, July 31, 2023 1,663,855 $ 6.61 Restricted Stock Units RSU activity during the six months ended July 31, 2023 was as follows: Number of Shares Weighted Average Grant Date Fair Value Nonvested, January 31, 2023 3,531,387 $ 44.00 Granted 3,155,899 24.80 Vested ( 688,473 ) 43.00 Forfeited ( 214,751 ) 41.16 Nonvested, July 31, 2023 5,784,062 $ 33.75 As of July 31, 2023, total unrecognized compensation expense related to non-vested RSUs was $ 162.7 million, adjusted for estimated forfeitures, based on the estimated fair value of the Company’s common stock at the time of grant. That cost is expected to be recognized over a weighted average period of 3.05 years. Employee Stock Purchase Plan The first offering period for the Employee Stock Purchase Plan ("ESPP") began on July 1, 2021 and ended on December 31, 2021. Thereafter, offering periods begin each year on January 1 and July 1. 14 Table of Contents nCino, Inc. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share and per share amounts and unless otherwise indicated) The fair value of ESPP shares during the six months ended July 31, 2022 and 2023 was estimated at the date of grant using the Black-Scholes option valuation model based on assumptions as follows for ESPP awards: Six Months Ended July 31, 2022 2023 Expected life (in years) 0.50 0.50 Expected volatility 49.65 % - 84.59 % 61.66 % - 61.86 % Expected dividends 0.00 % 0.00 % Risk-free interest rate 0.22 % - 2.52 % 4.77 % - 5.53 % Stock-Based Compensation Expense Total stock-based compensation expense included in our unaudited condensed consolidated statements of operations were as follows: Three Months Ended July 31, Six Months Ended July 31, 2022 2023 2022 2023 Cost of subscription revenues $ 352 $ 485 $ 728 $ 799 Cost of professional services and other revenues 1,915 2,460 3,786 4,089 Sales and marketing 3,447 3,830 6,818 7,041 Research and development 2,613 4,279 5,445 7,279 General and administrative 4,344 4,227 9,194 6,938 Total stock-based compensation expense $ 12,671 $ 15,281 $ 25,971 $ 26,146 Note 10. Leases Operating Leases The Company leases its facilities and a portion of its equipment under various non-cancellable agreements, which expire at various times through July 2028, some of which include options to extend for up to five years . The components of lease expense were as follows: Three Months Ended July 31, Six Months Ended July 31, 2022 2023 2022 2023 Operating lease expense $ 973 $ 1,312 $ 1,938 $ 2,617 Short-term lease expense 259 473 540 934 Variable lease expense 172 112 254 234 Total $ 1,404 $ 1,897 $ 2,732 $ 3,785 Supplemental cash flow information related to operating leases were as follows: Six Months Ended July 31, 2022 2023 Cash paid for amounts included in the measurement of operating lease liabilities $ 2,007 $ 2,231 Operating right-of-use assets obtained in exchange for operating lease liabilities 677 132 The weighted-average remaining lease term and weighted-average discount rate for the Company's operating lease liabilities as of July 31, 2023 were 3.32 years and 4.5 %, respectively. 15 Table of Contents nCino, Inc. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share and per share amounts and unless otherwise indicated) Future minimum lease payments as of July 31, 2023 were as follows: Fiscal Year Ending January 31, Operating Leases 2024 (remaining) $ 2,123 2025 3,171 2026 2,139 2027 1,080 2028 975 Thereafter 495 Total lease liabilities 9,983 Less: imputed interest ( 716 ) Total lease obligations 9,267 Less: current obligations ( 3,446 ) Long-term lease obligations $ 5,821 Note 11. Revolving Credit Facility On February 11, 2022, the Company entered into a Credit Agreement (the “Credit Agreement”), by and among the Company, nCino OpCo (the “Borrower”), certain subsidiaries of the Company as guarantors, and Bank of America, N.A. as lender (the “Lender”), pursuant to which the Lender is providing to the Borrower a senior secured revolving credit facility of up to $ 50.0 million (the “Credit Facility”). The Credit Facility includes borrowing capacity available for letters of credit subject to a sublimit of $ 7.5 million. Any issuance of letters of credit will reduce the amount available under the Credit Facility. Borrowings under the Credit Facility bear interest, at the Borrower’s option, at: (i) a base rate equal to the greater of (a) the Lender’s “prime rate,” (b) the federal funds rate plus 0.50 %, and (c) the Bloomberg Short Term Bank Yield Index ("BSBY") rate plus 1.00 %, plus a margin of 0.00 % (provided that the base rate shall not be less than 0.00 %); or (ii) the BSBY rate (provided that the BSBY shall not be less than 0.00 %), plus a margin of 1.00 %. The Company is also required to pay an unused commitment fee to the Lender of 0.25 % of the average daily unutilized commitments. The Company must also pay customary letter of credit fees. Borrowings under the Credit Facility are scheduled to mature on February 11, 2024, and the Company may repay amounts borrowed any time without penalty. Borrowings under the Credit Facility may be reborrowed. The Credit Agreement contains representations and warranties, affirmative, negative and financial covenants, and events of default that are customary for loans of this type. The financial covenant requires the Company and its subsidiaries on a consolidated basis to maintain Consolidated Liquidity of not less than $ 50.0 million. Consolidated Liquidity is measured as the sum of 100 % of unrestricted and unencumbered cash of the Company and its domestic subsidiaries, 75 % of unrestricted and unencumbered cash of the Company’s foreign subsidiaries and the lesser of Credit Facility availability and $ 25.0 million. The Company is also required to maintain at least $ 5.0 million of the Company's cash and/or marketable securities with the Lender which is considered restricted cash and is included in other long-term assets as of January 31, 2023 and prepaid expenses and other current assets as of July 31, 2023 on the Company's unaudited condensed consolidated balance sheets. The Credit Facility is guaranteed by the Company and each of its current and future material domestic subsidiaries (the “Guarantors”) and secured by substantially all of the personal property, subject to customary exceptions, of the Borrower and the Guarantors, in each case, now owned or later acquired, including a pledge of all of the Borrower’s capital stock, the capital stock of all of the Company’s domestic subsidiaries, and 65 % of the capital stock of foreign subsidiaries that are directly owned by the Borrower or a Guarantor. The Company had $ 30.0 million and $ 0.0 million outstanding and no letters of credit issued under the Credit Facility and was in compliance with all covenants as of January 31, 2023 and July 31, 2023, respectively. The available borrowing capacity under the Credit Facility was $ 50.0 million as of July 31, 2023. 16 Table of Contents nCino, Inc. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share and per share amounts and unless otherwise indicated) Note 12. Commitments and Contingencies In addition to the operating lease commitments described in Note 10 "Leases", the Company has additional contractual commitments as described further below. Purchase Commitments The Company’s purchase commitments consist of non-cancellable agreements to purchase goods and services, primarily licenses and hosting services, entered into in the ordinary course of business. Financing Obligations The Company entered into a lease agreement for the Company's headquarters in November 2020 in connection with a new lessor acquiring the property. Due to a purchase option contained in that lease, the Company is deemed to have continuing involvement and is considered to be the owner of the Company's headquarters for accounting purposes. As a result, the Company did not meet the criteria to apply sale-leaseback accounting and therefore, recorded an asset and corresponding financing obligation for $ 16.3 million at inception of that lease. The fair value of the leased property and corresponding financing obligation are included in property and equipment, net and financing obligations on the unaudited condensed consolidated balance sheets, respectively. In January 2021, the Company entered into an amendment to its November 2020 headquarters lease to provide for construction of a parking deck, which upon completion was subject to exclusive use by the Company. Due to the Company also being deemed to be the owner of the parking deck for accounting purposes, the costs associated with the construction of the parking deck were capitalized as construction in progress with a corresponding construction liability through construction. Upon completion of the parking deck in September 2021, for approximately $ 17.7 million, the costs of the construction in progress and the corresponding construction liability were reclassified to property and equipment, net and financing obligations on the unaudited condensed consolidated balance sheets, respectively. In April 2021, the Company entered into a new lease agreement for the construction of an additional office building that is on the same parcel of land as the Company's existing headquarters. Due to a purchase option contained in that April 2021 lease, the Company is also deemed to be the owner of the additional building for accounting purposes, the costs associated with the construction of the additional building were capitalized as construction in progress with a corresponding construction liability through construction. Upon completion of the additional building in November 2022, for approximately $ 22.4 million, the costs of the construction in progress and the corresponding construction liability were reclassified to property and equipment, net and financing obligations on the unaudited condensed consolidated balance sheets, respectively, and the term of the Company's November 2020 lease for its headquarters and the related parking deck became coterminous with the April 2021 lease. The term of the April 2021 lease expires in October 2037 with options to extend. The purchase option expires if not exercised on or before November 30, 2026. The leases will be analyzed for applicable lease accounting upon expiration of the purchase option, if not exercised. 17 Table of Contents nCino, Inc. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share and per share amounts and unless otherwise indicated) Purchase commitments and future minimum lease payments required under financing obligations as of July 31, 2023 is as follows: Fiscal Year Ending January 31, Purchase commitments Financing obligations - leased facility 2024 (remaining) $ 3,124 $ 2,225 2025 4,333 4,543 2026 2,423 4,644 2027 1,336 3,950 Total $ 11,216 $ 15,362 Residual financing obligations and assets 49,476 Less: amount representing interest ( 10,022 ) Financing obligations $ 54,816 A portion of the associated lease payments are recognized as interest expense and the remainder reduces the financing obligations. The weighted-average discount rate for the Company's financing obligations as of July 31, 2023 was 5.7 %. Indemnification In the ordinary course of business, the Company generally includes standard indemnification provisions in its arrangements with third parties, including vendors, customers, and the Company’s directors and officers. Pursuant to these provisions, the Company may be obligated to indemnify such parties for losses or claims suffered or incurred. It is not possible to determine the maximum potential loss under these indemnification provisions due to the Company’s limited history of prior indemnification claims and the unique facts and circumstances involved in each particular provision. To date, the Company has not incurred any material costs as a result of such obligations and has not accrued any material liabilities related to such obligations in the accompanying unaudited condensed consolidated financial statements. Legal Proceedings From time to time, the Company is involved in legal proceedings or is subject to claims arising in the ordinary course of business including the following: On February 23, 2021, the Company and certain of its officers and other employees were served with grand jury subpoenas wherein the Antitrust Division of the Department of Justice (the "DOJ") was seeking documents and information in connection with an investigation of the Company’s hiring and wage practices under U.S. federal antitrust laws. On February 8, 2023, the DOJ informed the Company that the investigation is closed. No fines, sanctions, actions, or penalties were imposed or taken against the Company or its officers or other employees in connection with the matter, and the costs the Company was incurring cooperating with the investigation have now ceased. On March 12, 2021, a putative class action complaint was filed in the United States District Court for the Eastern District of North Carolina (the "District Court"). The sole class representative in the suit is one individual alleging a contract, combination or conspiracy between and among the Company, Live Oak Bancshares, Inc. ("Live Oak") and Apiture, Inc. ("Apiture") not to solicit or hire each other’s employees in violation of Section 1 of the Sherman Act and N.C. Gen Stat. §§ 75-1 and 75-2. The complaint seeks treble damages and additional remedies, including restitution, disgorgement, reasonable attorneys’ fees, the costs of the suit, and pre-judgment and post judgment interest. The complaint does not allege any specific damages. On April 28, 2022, the District Court approved settlements between the plaintiff and defendant Live Oak in the amount of approximately $ 3.9 million and unnamed party Apiture in the amount of approximately $ 0.8 million. In July 2023, through mediation, the Company and the plaintiff reached a settlement agreement in principle of approximately $ 2.2 million that remains subject to court approval. While the Company strongly believes that it would prevail on the merits and that it has not violated the antitrust laws, in order to avoid the distraction and expense of protracted litigation and instead continue to focus on its employees and customers, the Company agreed to settle this matter. The Company has accrued for the proposed 18 Table of Contents nCino, Inc. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share and per share amounts and unless otherwise indicated) settlement agreement which is included in accrued expenses and other current liabilities as of July 31, 2023 on the Company's unaudited condensed consolidated balance sheets. On September 26, 2022, a purported stockholder of the Company filed a complaint in the Delaware Court of Chancery in connection with the series of mergers in which the Company became the parent of nCino OpCo and SimpleNexus. The complaint, captioned City of Hialeah Employees’ Retirement System, Derivatively on Behalf of Nominal Defendants nCINO, INC. (f/k/a Penny HoldCo, Inc.) and nCINO OpCo, Inc. (f/k/a nCino, Inc.) v. INSIGHT VENTURE PARTNERS, LLC, et al., C.A. No. 2022-0846-MTZ, names as defendants, Insight Ventures Partners, LLC., Insight Holdings Group, LLC., the Company’s directors and certain officers, along with nCino, Inc. and nCino OpCo, Inc. as nominal defendants, and alleges that the members of the board of directors, controlling stockholders, and officers violated their fiduciary duties in the course of negotiating and approving the series of mergers. The complaint alleges damages in an unspecified amount. Pursuant to the rights in its bylaws and Delaware law, the Company is advancing the costs incurred by the director and officer defendants in this action, and the defendants may assert indemnification rights in respect of an adverse judgment or settlement of the action, if any. Given the uncertainty and preliminary stages of this matter, the Company is unable to reasonably estimate any possible loss or range of loss that may result. Therefore, the Company has not made an accrual for the above matter in the unaudited condensed consolidated financial statements. The Company does not presently believe the above matters will have a material adverse effect on its day-to-day operations or the quality of the services, products or innovation it continues to provide to its customers. However, regardless of the outcome, legal proceedings can have an adverse impact on the Company because of the related expenses, diversion of management resources, and other factors. Other Commitments and Contingencies The Company may be subject to audits related to its non-income taxes by tax authorities in jurisdictions where it conducts business. These audits may result in assessments of additional taxes that are subsequently resolved with the authorities or potentially through the courts. The Company accrues for any assessments if deemed probable and estimable. Note 13. Related-Party Transactions On November 1, 2022, the Company's wholly-owned subsidiary, nCino OpCo, acquired preferred shares of ZestFinance, Inc. (d/b/a ZEST AI) ("Zest AI"), a private company, for $ 2.5 million and is included in investments as of January 31, 2023 and July 31, 2023 on the Company's unaudited condensed consolidated balance sheets. The investment is considered a related party transaction as entities affiliated with Insight Partners, a beneficial owner of the Company, own greater than ten percent of Zest AI. On May 23, 2023, the Company announced a strategic partnership with Zest AI to build an integration into the Company's consumer banking solution to enable lenders with streamlined access to consumer credit lending insights. Note 14. Basic and Diluted Loss per Share Basic loss per share is computed by dividing net loss attributable to nCino, Inc. by the weighted-average number of common shares outstanding for the fiscal period. Diluted loss per share is computed by giving effect to all potential weighted average dilutive common stock, including stock options issued and outstanding, nonvested RSUs issued and outstanding, and shares issuable pursuant to the ESPP. The dilutive effect of outstanding awards is reflected in diluted earnings per share by application of the treasury stock method. Diluted loss per share for the three months ended July 31, 2022 and 2023 and for the six months ended July 31, 2022 and 2023 is the same as the basic loss per share as there was a net loss for those periods, and inclusion of potentially issuable shares was anti-dilutive. 19 Table of Contents nCino, Inc. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share and per share amounts and unless otherwise indicated) The components of basic and diluted loss per share for periods presented are as follows (in thousands, except share and per share data): Three Months Ended July 31, Six Months Ended July 31, 2022 2023 2022 2023 Basic and diluted loss per share: Numerator Net loss attributable to nCino, Inc. $ ( 27,245 ) $ ( 15,884 ) $ ( 57,933 ) $ ( 27,127 ) Denominator Weighted-average common shares outstanding 110,391,865 112,396,716 110,198,509 112,262,527 Basic and diluted loss per share attributable to nCino, Inc. $ ( 0.25 ) $ ( 0.14 ) $ ( 0.53 ) $ ( 0.24 ) The following potential outstanding common stock were excluded from the diluted loss per share computation because the effect would have been anti-dilutive: Six Months Ended July 31, 2022 2023 Stock options issued and outstanding 2,308,091 1,664,830 Nonvested RSUs issued and outstanding 3,865,041 5,784,062 Shares issuable pursuant to the ESPP 17,285 16,994 Note 15. Restructuring In the fourth quarter of fiscal 2023, the Company announced a workforce reduction of approximately 7 % and office space reductions in certain markets (collectively, the “restructuring plan”) in furtherance of its efforts to improve operating margins and advance the Company’s objective of profitable growth. Lease termination costs were accounted for in accordance with ASC 842, Leases. The Company paid $ 0.8 million in the fourth quarter of fiscal 2023 to exercise an early termination clause to exit a facility during fiscal 2024, which was accounted for as a lease modification. The Company incurred charges in the in the fourth quarter of the Company’s fiscal 2023 of $ 4.8 million in connection with the restructuring plan. The accrual for severance and related benefit costs of $ 5.0 million for terminated employees was included in accrued compensation and benefits on the consolidated balance sheets as of January 31, 2023 and was paid in the first quarter of the Company’s fiscal 2024. 20 Table of Contents nCino, Inc. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share and per share amounts and unless otherwise indicated) The Company’s restructuring charges for the three and six months ended July 31, 2023 were as follows: Three Months Ended July 31, 2023 Six Months Ended July 31, 2023 Lease exit fees 1 Cost of subscription revenues 21 $ 39 Cost of professional services and other revenues 46 92 Sales and marketing 38 76 Research and development 131 265 General and administrative 2 5 Total 238 $ 477 1 These expenses reduced operating lease right-of-use assets on the unaudited condensed consolidated balance sheets . The Company had no restructuring charges for the three and six months ended July 31, 2022. 21 Table of Contents