What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-03-26 compared with 2023-03-28 · 125 added, 134 removed, 384 unchanged (40% of the section changed)

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For example, references in this Annual Report on Form 10-K to "fiscal 2024" refer to the fiscal year ended January 31, 2024.

The following section of this Form 10-K discusses our financial condition and results of operations for fiscal 2023 and 2022 and year-to-year comparisons between fiscal 2023 and 2022.

Discussions of fiscal 2021 items and year-to-year comparisons between fiscal 2022 and fiscal 2021 that are not included in this Form 10-K can be found in Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended January 31, 2022, filed with the SEC on March 31, 2022.

nCino is the pioneer in cloud banking.

Built by bankers for bankers, the nCino Bank Operating System is a single, multi-tenant software-as-a-service (SaaS) solution that helps financial institutions ("FI") modernize, innovate and outperform.

A leader in the global financial services technology industry, nCino is a proven partner that has helped more than 1,850 FIs of all sizes and complexities, including global, enterprise, regional and community banks;

credit unions;

new market entrants;

and independent mortgage banks power distinctive experiences, drive growth efficiencies, and run with full integrity.

With nCino, FIs can:

The following section of this Form 10-K discusses our financial condition and results of operations for fiscal 2024 and 2023 and year-to-year comparisons between fiscal 2024 and fiscal 2023.

Discussions of fiscal 2022 items and year-to-year comparisons between fiscal 2023 and fiscal 2022 that are not included in this Form 10-K can be found in Part II, Item 7,

“Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended January 31, 2023, filed with the SEC on March 28, 2023.

Through its single software-as-a-service ("SaaS") platform, nCino helps financial institutions ("FI") serving corporate and commercial, small business, consumer, and mortgage customers modernize and more effectively onboard clients, open accounts, make loans and navigate the loan lifecycle, and effectively monitor and manage their portfolio.

Transforming how FIs operate through innovation, reputation and speed, nCino is partnered with more than 1,800 customers globally.

With the nCino Bank Operating System, FIs can:

• digitally serve their clients across lines of business,

• improve financial results,

• improve efficiency,

• elevate employee experience and performance,

• manage risk and compliance more effectively, and

• establish an active data, audit, and business intelligence hub.

• manage risk and compliance more effectively,

• establish an active data, audit, and business intelligence hub, and

• embrace the value of intelligent automation and uncover data-driven insights.

nCino was originally founded in a bank to improve that FI’s operations and client service.

After realizing that virtually all FIs were dealing with the same problems—cumbersome legacy technology, fragmented data, disconnected business functions, and a disengaged workforce made it difficult to maintain relevancy in their clients’ lives—we were spun out as a separate company in late 2011.

This heritage is the foundation of our deep banking domain expertise, which differentiates us, continues to drive our strategy and makes us uniquely qualified to help FIs cross the modernization divide by providing a comprehensive solution that onboards clients, originates loans, and opens accounts on a single, cloud-based platform.

We initially focused the nCino Bank Operating System on transforming commercial and small business lending for community and regional banks in the United States ("U.S.").

We introduced this solution to enterprise banks in the U.S.

in 2014, and then internationally in 2017, and have subsequently expanded across North America, Europe and Asia-Pacific ("APAC").

Throughout this market expansion, we broadened the nCino Bank Operating System by adding functionality for consumer lending, client onboarding, deposit account opening, analytics and AI/ML.

After realizing that the same problems—cumbersome legacy technology, fragmented data, disconnected business functions, and a disengaged workforce made it difficult to maintain relevancy in their clients' lives—were endemic across the financial services industry, nCino spun out as a separate company in late 2011.

This heritage is the foundation of our deep banking domain expertise, which differentiates us, continues to drive our strategy, and makes us uniquely qualified to help FIs create new efficiencies by providing an end-to-end platform that spans business lines and combines capabilities for a seamless experience.

The nCino Bank Operating System was initially designed to help transform commercial and small business lending for community and regional banks.

This solution was introduced to enterprise banks in the United States ("U.S.") in 2014, and then internationally in 2017, and has subsequently expanded across North America, Europe, the Middle East, and Asia-Pacific ("APAC").

Throughout this market expansion, we broadened the nCino Bank Operating System by adding functionality for consumer lending, client onboarding, deposit account opening, analytics and artificial intelligence and machine learning.

In fiscal 2020, we acquired nCino Portfolio Analytics, LLC (formerly Visible Equity) and FinSuite as part of our strategy to build out our nIQ capabilities, and we established our nCino K.K.

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point-of-sale mortgage market.

We generally offer our solutions on a SaaS basis under multi-year contracts and recognize subscription revenues ratably over the term of the contract.

Our customers may initially purchase one of our solutions for implementing a client onboarding, loan origination and/or deposit account opening application in a specific line of business within the FI, such as commercial, small business, consumer, or mortgage.

On September 8, 2023, SimpleNexus began operating as SimpleNexus, LLC d/b/a nCino Mortgage, LLC ("nCino Mortgage") as part of our rebranding effort, resulting in a change to the trade name useful life.

As a result, the Company recorded accelerated amortization to fully amortize the remaining trade name intangible asset.

The effect of this change in estimate for the year ended January 31, 2024 was an increase in sales and marketing amortization expense of $9.5 million, which resulted in an increase in loss of operations and net loss attributable to nCino, Inc.

of $9.5 million, or $0.08 per basic and diluted share.

We generally offer the nCino Bank Operating System on a subscription basis pursuant to non-cancellable multi-year contracts that typically range from three to five years, and we employ a “land and expand” business model.

The nCino Bank Operating System is designed to scale with our customers, and once our solution is deployed, we seek to have our customers expand adoption within and across lines of business.

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are organized around FIs based on size, whereas internationally, we focus our sales efforts by geography.

As of January 31, 2023, we had 267 sales and sales support personnel in the U.S., including SimpleNexus, and 77 sales and support personnel in offices outside the U.S.

As of January 31, 2024, we had 223 sales and sales support personnel in the U.S., including nCino Mortgage, and 69 sales and support personnel in offices outside the U.S.

To help customers go live with our solutions, we offer professional services including configuration and implementation, training, and advisory services.

For enterprise FIs, we generally work with SI partners such as Accenture, Deloitte, and PwC for the delivery of professional services for the nCino Bank Operating System.

For regional FIs, we work

with SIs such as West Monroe Partners, and for community banks, we work with SIs or perform configuration and implementation ourselves.

For regional FIs, we work with SIs such as West Monroe Partners, and for community banks, we work with SIs or perform configuration and implementation ourselves.

We expect enterprise FIs to make up a greater proportion of our nCino Bank Operating System sales.

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

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

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

Our consolidated results of operations for fiscal 2022 and 2023 include the operating results of SimpleNexus from the Acquisition Date.

See Note 7 "Business Combinations" of the notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information.

Given it was prior to the Acquisition Date, no operating results for SimpleNexus are included in the comparative period for fiscal 2021.

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

In January 2023, nCino implemented an "in-person first" working environment at the Company's headquarters in Wilmington, N.C., in which full-time employees within Wilmington are expected to return to the office on a full-time basis.

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.

Employees impacted by this event are included in our headcount as of January 31, 2023.

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

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Our net losses include the operating results of SimpleNexus from the Acquisition Date.

In March 2024, we acquired DocFox, a leading solution provider automating onboarding experiences for commercial and business banking, for an aggregate purchase price of $75.0 million.

See Note 20 "Subsequent Events" of the notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information.

Factors Affecting Our Operating Results

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Mix of Subscription and Professional Services Revenues.

The initial deployment of our solutions by our customers requires a period of implementation and configuration services that typically range from three to 18 months, depending on scope.

The initial deployment of our solutions by our customers requires a period of implementation and configuration services that typically range from three months to 18 months, depending on the scope.

As a result, during the initial go-live period for a customer on the nCino Bank Operating System, professional services revenues generally make up a substantial portion of our revenues from that customer, whereas over time, revenues from established customers are more heavily weighted to subscriptions.

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We assess our performance in this area using a metric we refer to as subscription revenue retention rate.

We calculate our subscription revenue retention rate as total subscription revenues in a fiscal year from customers who contracted for any of our solutions as of January 31 of the prior fiscal year, expressed as a percentage of total subscription revenues for the prior fiscal year.

percentage of total subscription revenues for the prior fiscal year.

In accordance with this definition, subscription revenues from customers obtained through an acquisition will first be included in the calculation in the fiscal year subsequent to such acquisition, for the periods they were a customer of nCino.

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In addition, because larger FIs tend to make more sizable purchases with longer activation schedules, we expect variability in our subscription revenue retention rates based on the timing and extent of our continued penetration of this portion of the market.

The increase in our subscription revenue retention rate for fiscal 2021 was primarily due to accelerated activation of licenses sold in the year for our PPP and Coronavirus Business Interruption Loan Scheme solutions.

The moderation in our subscription revenue retention rate for fiscal 2022 was due to a higher mix of new customer sales with prolonged activation schedules.

The increase in our subscription revenue retention rate for fiscal 2023 was due to the inclusion of customers who had contracts with SimpleNexus in effect prior to January 31, 2022.

The increase in our subscription revenue retention rate for fiscal 2023 was due to the inclusion of customers who had contracts with nCino Mortgage in effect prior to January 31, 2022.

Subscription revenues from periods prior to the acquisition were excluded from the calculation for fiscal 2023.

Excluding SimpleNexus, the subscription revenue retention rate for fiscal 2023 was 125%.

Excluding nCino Mortgage, the subscription revenue retention rate for fiscal 2023 was 125%.

The moderation in our subscription revenue retention rate for fiscal 2024 was due to a decline in revenues from customers adversely affected by an increase in mortgage interest rates, from the expiration of licenses utilized for forgiveness monitoring of Paycheck Protection Program loans, and from the acquisition of customers by non-customers.

Our use of subscription revenue retention rate has limitations as an analytical tool, and investors should not consider it in isolation.

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The graphic below illustrates our ACV-based net retention for customers initially signed since fiscal 2013.

Customers who signed with SimpleNexus prior to January 31, 2022, are included in the fiscal 2022 cohort and customers who

signed with Portfolio Analytics prior to January 31, 2020, are represented in the fiscal 2020 cohort.

Customers who signed with nCino Mortgage prior to January 31, 2022, are included in the fiscal 2022 cohort and customers

who signed with Portfolio Analytics prior to January 31, 2020, are represented in the fiscal 2020 cohort.

Each individual cohort is not necessarily predictive of other or future cohorts.

Annual Contract Value ("ACV")

Interest Rate Environment.

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

Macroeconomic Environment.

We are currently operating in a higher interest rate environment as the U.S.

Federal Reserve has raised interest rates as a means to manage inflation.

These rate increases have had an impact on the real estate market in the U.S.

and specifically, the demand for mortgages and mortgage-related products and services, which has had a negative impact on our SimpleNexus business.

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

and specifically, the demand for mortgages and mortgage-related products and services, which has had a negative impact on our nCino Mortgage business.

We will continue to monitor the impact the macroeconomic environment may have on our business.

Continued Investment in Innovation and Growth .

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Our subscription revenues consist principally of fees from customers for accessing our solutions and maintenance and support services that we generally offer under non-cancellable multi-year contracts, which

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

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

Specifically, we offer:

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• nIQ for which we generally charge based on the asset size of the customer or on a usage basis.

• Through SimpleNexus, a digital homeownership platform uniting people, systems, and stages of the mortgage process into a seamless end-to-end journey for which we generally charge on a per seat basis.

• Through nCino Mortgage, a digital homeownership solution uniting people, systems, and stages of the mortgage process into a seamless end-to-end journey for which we generally charge on a per seat basis.

• Maintenance and support services as well as internal-use or “sandbox” development licenses, for which we generally charge as a percentage of the related subscription fees.

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Where seats are activated in stages, we charge subscription fees from the date of activation through the anniversary of the initial activation date, and annually thereafter.

Subscription fees associated with the nCino Bank Operating System are generally billed annually in advance while subscription fees for SimpleNexus are generally billed monthly in advance.

Subscription fees associated with the nCino Bank Operating System are generally billed annually in advance while subscription fees for nCino Mortgage are generally billed monthly in advance.

Maintenance and support fees, as well as development licenses, are provided over the same periods as the related subscriptions, so fees are invoiced and revenues are recognized over the same periods.

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For enterprise and larger regional FIs, we generally work with SI partners to provide the majority of implementation services for the nCino Bank Operating System, for which these SI partners bill our customers directly.

We have historically delivered professional services ourselves for community banks and smaller credit unions and SimpleNexus has historically provided professional services directly to its customers.

We have historically delivered professional services ourselves for community banks and smaller credit unions and nCino Mortgage has historically provided professional services directly to its customers.

Revenues for implementation, training, and advisory services are generally recognized on a proportional performance basis, based on labor hours incurred relative to total budgeted hours.

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Interest expense consists primarily of interest related to our financing obligations along with interest expense on borrowings, commitment fees, and amortization of debt issuance costs associated with our secured revolving credit facility.

Other Income (Expense), Net.

Other income (expense), net consists primarily of foreign currency gains and losses, the majority of which is due to intercompany loans that are denominated in currencies other than the underlying functional currency of the applicable entity.

Other Expense, Net.

Other expense, net consists primarily of foreign currency gains and losses, the majority of which is due to intercompany loans that are denominated in currencies other than the underlying functional currency of the applicable entity.

Income Tax Provision (Benefit).

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The following tables present our selected consolidated statements of operations data for fiscal 2022, 2023, and 2024 in both dollars and as a percentage of total revenues, except as noted.

The comparability of our operating results is impacted by our SimpleNexus acquisition.

In our discussion of changes in our results of operations for our year-to-year comparisons between fiscal 2023 and 2022, we disclose the impact of the growth of revenues from SimpleNexus.

Expense contributions from our SimpleNexus acquisition for each of the respective period comparisons generally were not separately identifiable due to the integration of this business into our existing operations.

Fiscal Year Ended January 31,

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Interest expense (1,514) (2,807) (4,135)

Other income (expense), net 1,693 (1,277) (1,356)

Other expense, net (1,277) (1,356) (856)

Loss before income taxes (73,954) (97,773) (41,936)

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Basic and diluted 96,722,464 110,615,734 112,672,397

1 Includes the operating results of SimpleNexus from the Acquisition Date, see Note 7 "Business Combinations" of the notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information.

The Company recognized stock-based compensation expense as follows:

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Sales and marketing 2,303 11,087 20,590

General and administrative 10 — —

Total amortization expense $ 4,907 $ 28,200 $ 37,226

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Interest expense (0.6) (0.7) (0.9)

Other income (expense), net 0.8 (0.5) (0.3)

Other expense, net (0.5) (0.3) (0.2)

Loss before income taxes (27.1) (23.9) (8.9)

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Subscription Revenues

Subscription revenues increased $119.9 million for fiscal 2023 compared to fiscal 2022, due to initial revenues from customers who did not contribute to subscription revenues during the prior period, including customers added as a result of our acquisition of SimpleNexus, and growth from existing customers within and across lines of business.

Of the increase, 44.5% was attributable to increased revenues from existing customers as additional seats were activated in accordance with contractual terms and customers expanded their adoption of our solutions, 8.7% was attributable to initial revenues from customers who did not contribute to subscription revenues during the prior period, and 46.8% was attributable to revenues from SimpleNexus.

Subscription revenues were 84.4% of total revenues for fiscal 2023 compared to 82.1% of total revenues for fiscal 2022, primarily due to growth in our installed base and SimpleNexus.

Subscription revenues increased $64.7 million for fiscal 2024 compared to fiscal 2023, due to initial revenues from customers who did not contribute to subscription revenues during the prior period and growth from existing customers within and across lines of business.

Of the increase, 86.2% was attributable to increased revenues from existing customers as additional seats were activated in accordance with contractual terms and customers expanded their adoption of our solutions, and 13.8% was attributable to initial revenues from customers who did not contribute to subscription revenues during the prior period.

Subscription revenues were 85.9% of total revenues for fiscal 2024 compared to 84.4% of total revenues for fiscal 2023, primarily due to growth in our installed base.

Professional Services and Other Revenues

Professional services and other revenues increased $3.5 million for fiscal 2024 compared to fiscal 2023, primarily due to the addition of new customers as well as expanded adoption by existing customers within and across lines of business where implementation, configuration, and training services were required.

36.4% of the increase was attributable to revenues from SimpleNexus.

Cost of Revenues and Gross Margin

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Cost of subscription revenues increased $14.6 million for fiscal 2024 compared to fiscal 2023, generating a gross margin for subscription revenues of 70.5% compared to a gross margin of 69.2% for fiscal 2023.

The decrease in gross margin percentage is primarily due to an increase of $14.4 million in amortization expense for acquired developed technology related to the acquisition of SimpleNexus included for a full year in fiscal 2023 compared to less than a month in fiscal 2022.

Costs related to Salesforce user fees increased $10.4 million as we continued to add new customers and sell additional functionality to existing customers, and other costs of subscription revenues increased $2.5 million due to costs associated with access to other platforms and data center costs.

Personnel costs, including stock-based compensation expense, increased $4.3 million due to an increase in average headcount, including headcount from the acquisition of SimpleNexus contributing for a full year in fiscal 2023 compared to less than a month in fiscal 2022.

The increase in cost of subscription revenues also included an increase of $0.8 million in allocated overhead costs due to growth supporting our continued business expansion.

Personnel costs, including stock-based compensation expense, increased $2.0 million, mainly from an increase in average headcount.

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

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Cost of professional services and other revenues increased $7.3 million for fiscal 2024 compared to fiscal 2023, generating a gross margin for professional services and other revenues of (5.3)% compared to a gross margin of 0.3% for fiscal 2023.

For fiscal 2023, personnel costs, including stock-based compensation expense, increased $13.6 million for professional services compared to the prior year period due to an increase in average headcount, including headcount from the acquisition of SimpleNexus contributing for a full year in fiscal 2023 compared to less than a month in fiscal 2022.

Also included in the increase in personnel costs is $0.3 million in restructuring costs incurred in connection with the headcount reductions in January 2023.

The increase in cost of professional services and other revenues also included an increase of $1.7 million in allocated overhead costs due to growth supporting our business, an increase of $0.8 million in travel-related costs, and a $0.4 million increase in reimbursable travel and related expenses for the professional services organization.

For fiscal 2024, personnel costs increased $6.3 million for professional services and other revenues compared to the prior year period, mainly from an increase in average headcount and a $2.1 million increase in stock-based compensation expense, partially offset by a decrease in restructuring costs incurred in connection with the headcount reductions announced in January 2023.

The increase in cost of professional services and other revenues also included an increase of $0.8 million in allocated

overhead costs due to growth supporting our business, partially offset by a decrease of $0.3 million in travel-related costs.

The decrease in our professional services and other gross margin for fiscal 2024 was primarily due to a decline in realized effective billing and utilization rates in our professional services teams.

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Sales and Marketing

Sales and marketing expenses increased $44.8 million for fiscal 2023 compared to fiscal 2022, primarily due to an increase of $24.9 million in personnel costs, including stock-based compensation expense, mainly from an increase in average headcount, including headcount from the acquisition of SimpleNexus contributing for a full year in fiscal 2023 compared to less than a month in fiscal 2022.

Also included in the increase in personnel costs is $1.3 million in restructuring costs incurred in connection with the headcount reductions in January 2023.

The increase in personnel costs was partially offset by a decrease in expatriate tax equalization expenses compared to fiscal 2022.

Amortization expense for acquired customer relationships and trade name increased $8.8 million related to the acquisition of SimpleNexus.

The increase in sales and marketing expenses also included an increase of $4.1 million in sales-related travel costs, an increase of $3.4 million in marketing costs primarily attributable to the re-establishment of in-person conferences following COVID-19, an increase of $2.7 million in allocated overhead costs, and an increase of $0.9 million in third-party consulting fees.

Our sales and marketing headcount decreased by 2 from January 31, 2022 to January 31, 2023.

In the fourth quarter of fiscal 2023 due to a change in responsibilities, 12 employees moved to our general and administrative department from our sales and marketing department.

Sales and marketing expenses increased $2.9 million for fiscal 2024 compared to fiscal 2023, primarily attributable to an increase of $9.5 million in trade name amortization expense as a result of accelerated amortization expense in the third quarter of fiscal 2024 to fully amortize the remaining trade name intangible asset as a result of the rebranding of the SimpleNexus solution to nCino Mortgage.

The increase in sales and marketing expenses also included an increase of $0.8 million in allocated overhead costs.

The increase in sales and marketing expenses was partially offset by a decrease of $4.3 million in personnel costs, mainly from a decrease in average headcount and a decrease in restructuring costs incurred in connection with the headcount reductions announced in January 2023, partially offset by a $2.1 million increase in stock-based compensation expense, compensation increases, and an increase in expatriate tax equalization expenses.

Also included in the offset to the increase in sales and marketing expenses was a decrease of $1.3 million in marketing costs, a decrease of $1.2 million in sales-related travel costs, and a decrease of $0.6 million in third-party consulting fees.

Our sales and marketing headcount decreased by 64 from January 31, 2023 to January 31, 2024 primarily due to attrition and our workforce reduction announced in January 2023.

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

Research and Development

Research and development expenses increased $42.2 million for fiscal 2023 compared to fiscal 2022, primarily due to an increase of $41.2 million in personnel costs, including stock-based compensation expense, mainly from an increase in average headcount, including headcount from the acquisition of SimpleNexus contributing for a full year in fiscal 2023 compared to less than a month in fiscal 2022.

Also included in the increase in personnel costs is $2.0 million in restructuring costs incurred in connection with the headcount reductions in January 2023.

The increase in research and development expenses also included an increase of $3.9 million in allocated overhead costs due to growth supporting our continued business expansion and an increase of $1.0 million in travel-related costs, partially offset by a $4.0 million decrease in third party professional fees as a result of lower contract research and development spend.

Our research and development headcount grew by 32 from January 31, 2022 to January 31, 2023.

Research and development expenses decreased $4.3 million for fiscal 2024 compared to fiscal 2023, primarily due to a $2.4 million decrease in third party professional fees as a result of reduced contract research and development spend and a decrease of $2.3 million in personnel costs, mainly from a decrease in average headcount and a decrease in restructuring costs incurred in connection with the headcount reductions announced in January 2023, partially offset by a $4.3 million increase in stock-based compensation expense and compensation increases.

The decrease in research and development expenses was partially offset by an increase of $0.7 million in allocated overhead costs due to growth supporting our continued business expansion.

Our research and development headcount decreased by 71 from January 31, 2023 to January 31, 2024 primarily due to our workforce reduction announced in January 2023.

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

General and Administrative

General and administrative expenses increased $11.9 million for fiscal 2023 compared to fiscal 2022, primarily due to an increase of $19.2 million in personnel costs, including stock-based compensation, from additional headcount as we continued to scale our business, mainly from an increase in average headcount, including headcount from the acquisition of SimpleNexus contributing for a full year in fiscal 2023 compared to less than a month in fiscal 2022.

Also included in the increase in personnel costs is $1.2 million in restructuring costs incurred in connection with the headcount reductions in January 2023.

The increase in general and administrative spend also included an increase of $2.7 million in allocated overhead and other general and administrative costs and an increase of $0.7 million in travel-related costs.

Third party professional fees decreased $10.6 million for fiscal 2023 compared to fiscal 2022, mostly attributable to a decrease in third party professional fees and expenses related to acquisition costs for SimpleNexus and fees and expenses related to the government antitrust investigation and related civil action disclosed in Item 3 "Legal Proceedings" of Part I of this Annual Report on Form 10-K (the "Antitrust Matters") partially offset by an increase in other professional fees.

Our general and administrative headcount grew by 20 from January 31, 2022 to January 31, 2023.

In the fourth quarter of fiscal 2023 due to a change in responsibilities, 12 employees moved from our sales and marketing department to our general and administrative department.

General and administrative expenses decreased $6.8 million for fiscal 2024 compared to fiscal 2023, primarily due to a decrease of $3.5 million in third party professional fees, mostly attributable to decreases related to acquisition costs for SimpleNexus and fees and expenses related to other litigation expenses including a dismissed government antitrust investigation and related civil action (the "Antitrust Matters"), partially offset by the proposed settlement agreement for the related civil action of approximately $2.2 million, disclosed in Item 3 "Legal Proceedings" of Part I of this Annual Report on Form 10-K, and an increase in other professional fees.

The decrease in general and administrative spend also included a decrease of $3.4 million in personnel costs for fiscal 2024 compared to fiscal 2023, mostly attributable to a $1.2 million decrease in stock-based compensation expense, a decrease in average headcount, and a decrease in restructuring costs incurred in connection with the headcount reductions announced in January 2023, partially offset by compensation increases.

included in the decrease in general and administrative expenses was a decrease of $0.5 million in travel-related costs, offset by an increase of $0.5 million in allocated overhead and other general and administrative costs.

Our general and administrative headcount decreased by 26 from January 31, 2023 to January 31, 2024, primarily due to our workforce reduction announced in January 2023.

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

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Interest expense (2,807) (0.7) (4,135) (0.9)

Other income (expense), net (1,277) (0.5) (1,356) (0.3)

Interest expense increased $1.3 million primarily due to a larger balance on our financing obligations for leases for which we are considered the owners for accounting purposes, and also due to interest expenses associated with a credit agreement for a senior secured revolving credit facility of up to $50.0 million we entered into on February 11, 2022 (the "Credit Facility") that was not in place in the prior comparative year.

Income Tax Provision (Benefit)

Other expense, net (1,356) (0.3) (856) (0.2)

Interest income increased $2.2 million for fiscal 2024 compared to fiscal 2023, due to increase in our accounts earning interest and increased interest rates.

Interest expense increased $1.3 million for fiscal 2024 compared to fiscal 2023, due to borrowing on our revolving credit facility and an increase in our financing obligations for leases for which we are considered the owners for accounting purposes.

The decrease of $0.5 million in other expense, net was primarily driven by intercompany loans and transactions that are denominated in currencies other than the underlying functional currency of the applicable entity.

Income Tax Provision

Fiscal Year Ended January 31,

($ in thousands) 2023 2024

Income tax provision (benefit) $ (23,833) (8.7) % $ 4,071 1.0 %

Income tax provision was $4.1 million for fiscal 2023 compared to a benefit of $23.8 million for fiscal 2022 and resulted in an effective tax rate of (4.2)% compared to 32.2% in the prior fiscal year.

In fiscal 2023, the income tax provision was primarily due to taxes from profitable jurisdictions outside of the U.S., which includes withholding taxes.

In fiscal 2022, the income tax benefit was primarily due to the reduction of the valuation allowance from the acquisition of SimpleNexus, offset by a tax provision from profitable jurisdictions outside of the U.S.

Income tax provision $ 4,071 1.0 % $ 1,590 0.3 %

Income tax provision was $1.6 million for fiscal 2024 compared to a provision of $4.1 million for fiscal 2023 and resulted in an effective tax rate of (3.8)% compared to (4.2)% in the prior fiscal year.

See Note 12 "Income Taxes" of the notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further details on the components of income tax and a reconciliation of the U.S.

federal statutory rate to the effective tax rate.

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

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

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

Beginning in fiscal 2023, we have adopted, as required, Code Section 174, as amended by the Tax Cuts and Jobs Act of 2017.

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

This will result in the repartition of our deferred tax asset balances from net operating losses and tax credit carryforwards to non-tax attribute

deferred tax balances.

In fiscal 2024, based on all available positive and negative evidence, having demonstrated sustained profitability and cumulative pre-tax book income for the past three years, which is objective and verifiable, we have concluded that it is more likely than not that our United Kingdom deferred tax assets will be realizable.

We released $3.7 million of our valuation allowance in fiscal 2024 and will continue to monitor the need for a valuation allowance against our deferred tax assets on a quarterly basis.

We have adopted, as required, Code Section 174, as amended by the Tax Cuts and Jobs Act of 2017.

This will result in the repartition of our deferred tax asset balances from net operating losses and tax credit carryforwards to non-tax attribute deferred tax balances.

In addition, this may reduce our operating cash flows in future periods through cash remittances of U.S.

federal and state income tax.

We expect these changes to continue to impact our cash tax liability.

The Company regularly evaluates and continues to monitor the likelihood of outcomes resulting from legislation changes to determine the adequacy of our provision for income taxes.

In 2021, the Organization of Economic Cooperation and Development introduced its Pillar Two Framework Model Rules ("Pillar 2"), that was supported by over 130 countries worldwide, which is designed to impose a 15% global minimum tax on adjusted financial results.

Certain aspects of Pillar 2 took effect on January 1, 2024, while other aspects go into effect on January 1, 2025.

While many aspects of the application of Pillar 2 remain to be clarified, the Company does not expect Pillar 2 to impact its tax liability.

The company will continue to monitor and reflect the impact of such legislative changes in future financial statements as appropriate.

Comparison of the Fiscal Years Ended January 31, 2022 and 2023

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

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

Non-GAAP operating loss.

Non-GAAP operating loss is defined as loss from operations as reported in our consolidated statements of operations excluding the impact of amortization of intangible assets, stock-based compensation expense, acquisition-related expenses, legal expenses related to certain litigation, and restructuring and related charges, resulting from the Restructuring Plan.

See Note 19 "Restructuring" of the notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for more information on the charges related to the Restructuring Plan.

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

Non-GAAP operating loss eliminates potential differences in performance caused by these items that are not indicative of the Company's ongoing operating performance and hinders comparability with prior and future performance.

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

Non-GAAP operating income (loss).

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

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

Non-GAAP operating income (loss) eliminates potential differences in performance caused by these items that are not indicative of the Company's ongoing operating performance and hinders comparability with prior and future performance.

This non-GAAP financial measure does not replace the presentation of our GAAP financial results and should only be used as a supplement to, not as a substitute for, our financial results presented in accordance with GAAP.

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

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

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

Fiscal Year Ended January 31,

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Total adjustments 53,716 91,872 101,291

Non-GAAP operating loss $ (14,195) $ (17,641) $ (2,141)

Non-GAAP operating income (loss) $ (17,641) $ (2,141) $ 61,779

1 Represents legal expenses related to the Antitrust Matters and a shareholder derivative lawsuit.

2 Stock-based compensation benefit of $0.2 million related to restructuring is included on the stock-based compensation expense line item.

2 Stock-based compensation benefit of $0.2 million related to restructuring is included on the stock-based compensation expense line item for the fiscal year ended January 31, 2023.

Liquidity and Capital Resources

As of January 31, 2024, we had $112.1 million in cash and cash equivalents, and an accumulated deficit of $352.8 million.

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

We expect to continue to incur operating losses on a GAAP basis for the foreseeable future.

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

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

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

We used a majority of the proceeds from our initial public offering in July 2020, which were in our cash and cash equivalents on the balance sheet, to consummate the acquisition of SimpleNexus in January 2022.

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

To date, we have funded our capital needs through issuances of common stock including our initial public offering in July 2020, operating cash flows, and during fiscal 2023, our revolving line of credit.

We generally bill and collect from our customers annually in advance.

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Because we recognize revenues ratably, our deferred revenue balance mirrors the seasonality of our billings.

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

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

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

As of 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.

See Note 15 "Revolving Credit Facility" of the notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for more information.

As of January 31, 2024, the Company had no amounts outstanding, no letters of credit issued under the Credit Facility, was in compliance with all covenants and had borrowing availability of $50.0 million.

On March 17, 2024, the Company entered into the Second Amendment for the Credit Facility which, among other things, increased our borrowing availability to $100.0 million.

In March 2024, we borrowed $75.0 million under the Credit Facility to fund the acquisition of DocFox.

The interest rate at the time of borrowing was 7.36%.

Following the acquisition, we had borrowing availability of $25.0 million.

See Note 15 "Revolving Credit Facility" and Note 20 "Subsequent Events" of the notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for more information.

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

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

We expect capital expenditures will be appreciably higher in absolute dollars in fiscal 2025 for planned office build-outs, mainly for an international office, compared to prior fiscal years to accommodate our growth, which we estimate to be approximately $8.5 million.

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

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since its inception.

Pursuant to an agreement with the holders of the non-controlling interest in nCino K.K., beginning in 2027 we may redeem the non-controlling interest, or be required to redeem such interest by the holders thereof, based on a prescribed formula derived from the relative revenues of nCino K.K.

Pursuant to an agreement with the holders of the non-controlling interest in nCino

K.K., beginning in 2027 we may redeem the non-controlling interest, or be required to redeem such interest by the holders thereof, based on a prescribed formula derived from the relative revenues of nCino K.K.

and the Company.

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As of January 31, 2023 and January 31, 2024, the redeemable non-controlling interest was $3.6 million and $3.4 million, respectively.

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

during fiscal 2024.

As part of our joint venture obligations, we made an additional cash capital contribution of $1.0 million to nCino K.K.

during the third quarter of fiscal 2024.

Summary Cash Flow information for fiscal 2022, 2023, and 2024 are set forth below.

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Net cash used in investing activities (278,488) (20,725) (6,328)

Net cash provided by financing activities 274,121 15,922 36,712

Net Cash Used in Operating Activities

Net cash provided by (used in) financing activities 15,922 36,712 (21,113)

Net Cash Provided by (Used in) Operating Activities

The $57.3 million provided by operating activities in fiscal 2024 reflects our net loss of $43.5 million and $16.4 million used in changes in working capital accounts, offset by $117.2 million in non-cash charges.

Non-cash charges primarily consisted of stock-based compensation, depreciation and amortization, amortization of costs capitalized to obtain revenue contracts, non-cash operating lease costs, deferred income taxes, provision for bad debt, foreign currency losses related to intercompany loans and transactions, and an unrealized gain on investment.

Cash used in working capital accounts was principally a function of a $14.3 million increase in accounts receivable due to the timing of billings and collections from customers, payments of $10.3 million of capitalized costs to obtain revenue contracts, which consisted primarily of sales commissions, a $6.0 million decrease in accrued expenses and other current liabilities which includes payments of approximately $5.0 million for severance and other employee costs associated with the restructuring plan and changing commission payment plans from a quarterly basis to a monthly basis, and a decrease of $4.1 million in operating lease liabilities.

The cash used in working capital accounts was partially offset by a $15.9 million increase in deferred revenue, as we expanded our customer base and renewed existing customers, a $1.9 million decrease in prepaid expenses and other assets, and a $0.5 million increase in accounts payable.

The $15.4 million used in operating activities in fiscal 2023 reflects our net loss of $101.8 million and $14.9 million used in changes in working capital accounts, partially offset by $101.3 million in non-cash charges.

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

Cash used in working capital accounts was principally a function of a $26.8 million increase in accounts receivable due to the timing of billings and collections from customers, an increase of $12.2 million of capitalized costs to obtain revenue contracts, which primarily relates to payments for sales commissions as we expand our customer base, a decrease of $4.8 million in operating lease liabilities, a $3.4 million increase in prepaid expenses and other assets, and a $1.2 million decrease in accrued expenses and other current liabilities.

Cash used in working capital accounts was principally a function of a $26.8 million increase in accounts receivable due to the timing of billings and collections from customers, an increase of $12.2 million of capitalized costs to obtain revenue contracts, which primarily related to payments for sales commissions as we expanded our customer base, a decrease of $4.8 million in operating lease liabilities, a $3.4 million increase in prepaid expenses and other assets, and a $1.2 million decrease in accrued expenses and other current liabilities.

The cash used in working capital accounts was partially offset by a $33.5 million increase in deferred revenue, as we expanded our customer base and renewed existing customers.

The $19.2 million used in operating activities in fiscal 2022 reflects our net loss of $50.1 million, partially offset by $24.5 million in non-cash charges and $6.4 million generated by changes in working capital accounts.

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

Cash generated by working capital accounts was principally a function of a $24.3 million increase in deferred revenue, as we expanded our customer base and renewed existing customers, a $7.3 million increase in accrued expenses and other current liabilities, and a $4.4 million increase in accounts payable.

The cash generated by working capital accounts was partially offset by an increase of $13.5 million in accounts receivable due to the timing of billings and collections from customers, an increase of $11.0 million of capitalized costs to obtain revenue contracts, which primarily relates to payments for sales commissions as we expand our customer base, a decrease of $2.6 million in operating lease liabilities, and a $2.5 million increase in prepaid expenses and other assets.

Net Cash Used in Investing Activities

The $20.7 million used in investing activities in fiscal 2023 was comprised of $18.3 million used for the purchase of property and equipment and the completion of leasehold improvements to our additional headquarter building to support the expansion of our business, $2.5 million for the purchase of preferred stock in Zest AI, and $0.6 million for an asset acquisition completed in August 2022.

The cash used in investing activities was partially offset by $0.7 million received for a net working

capital adjustment from our SimpleNexus acquisition.

The $278.5 million used in investing activities in fiscal 2022 comprised of $269.0 million used for the acquisition of SimpleNexus, $5.5 million used for the purchase of property and equipment and leasehold improvements to support the expansion of our business, and $4.0 million used for the purchase of an investment.

Net Cash Provided by Financing Activities

The $6.3 million used in investing activities in fiscal 2024 was comprised of $3.5 million used for the purchase of property and equipment and leasehold improvements to support the expansion of our business, $2.5 million used for the purchase of preferred stock in Rich Data Co, and $0.4 million for the final cash considerations relating to an asset acquisition completed in August 2022.

The $20.7 million used in investing activities in fiscal 2023 was comprised of $18.3 million used for the purchase of property and equipment and the completion of leasehold improvements to our additional headquarter building to support the expansion of our business, $2.5 million used for the purchase of preferred stock in Zest AI, and $0.6 million for

an asset acquisition completed in August 2022.

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

Net Cash Provided by (Used in) Financing Activities

The $21.1 million used in financing activities in fiscal 2024 was comprised principally of payments of $30.0 million on the Credit Facility and principal payments of $1.2 million on financing obligations.

The cash used in financing activities was partially offset by $4.7 million of proceeds from stock issuances under the employee stock purchase plan, $4.5 million of proceeds from the exercise of stock options, and $1.0 million in proceeds from the non-controlling interest in our Japan joint venture.

The $36.7 million provided by financing activities in fiscal 2023 was comprised principally of $50.0 million of proceeds from borrowings on the Credit Facility to expand our liquidity, $4.5 million in proceeds from stock issuances under the employee stock purchase plan, and $3.8 million of proceeds from the exercise of stock options.

The cash provided by financing activities was partially reduced by payments of $20.0 million on the Credit Facility, principal payments of $1.1 million on financing obligations, and payments of debt issuance costs of $0.4 million.

The $15.9 million provided by financing activities in fiscal 2022 comprised principally of $13.9 million of proceeds from the exercise of stock options and $2.5 million in proceeds from stock issuances under the employee stock purchase plan, partially reduced by stock issuance costs of $0.2 million for shares issued in consideration for the SimpleNexus acquisition, and principal payments of $0.3 million on the financing obligation.

The cash provided by financing activities was partially reduced by payments of $20.0 million on the Credit Facility, principal payments of $1.1 million on the financing obligations, and payments of debt issuance costs of $0.4 million.

Contractual Obligations and Commitments

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Generally, our subscription contracts for the nCino Bank Operating System are three years or longer in length, billed annually in advance, are non-cancelable, and do not contain refund-type provisions.

Subscription contracts for SimpleNexus typically range from one to three years and are generally billed monthly in advance.

Subscription contracts for nCino Mortgage typically range from one to three years and are generally billed monthly in advance.

Subscription arrangements for the nCino Bank Operating System that are cancelable generally have penalty clauses.

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As a result, during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill.

Upon conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are

recorded to the Company's consolidated statements of operations.

Upon conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the Company's consolidated statements of operations.

Determining the useful life of an intangible asset also requires judgment as different types of intangible assets have different lives.

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Due to the complexity of any uncertainty, the ultimate resolution may result in a remittance that is different from the current estimate of any tax liabilities.

Change in Accounting Estimate

See Note 8 "Goodwill and Intangible Assets" of the notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for a change in estimate related to the useful life of the SimpleNexus trade name during the third quarter of fiscal 2024.

Recent Accounting Pronouncements

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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 7. Management’s Discussion and Analysis