What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-27 compared with 2024-05-29 · 106 added, 73 removed, 297 unchanged (38% of the section changed)

27 unchanged sentences

We have included the financial results of DocFox in our unaudited condensed consolidated financial statements from the DocFox Acquisition Date.

We acquired Integrated Lending Technologies, LLC ("ILT") on April 1, 2024 (the "ILT Acquisition Date"), which provides consumer loan origination software that streamlines direct and indirect lending operations, for an aggregate

preliminary purchase price of $19.9 million in cash.

price of $20.0 million in cash.

We have included the financial results of ILT in our unaudited condensed consolidated financial statements from the ILT Acquisition Date.

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

As of April 30, 2024, we had 205 sales and sales support personnel in the U.S.

As of July 31, 2024, we had 206 sales and sales support personnel in the U.S.

and 88 sales and support personnel in offices outside the U.S.

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

For the three months ended April 30, 2023 and 2024, our total revenues were $113.7 million and $128.1 million, respectively, representing a 12.7% increase.

For the three months ended April 30, 2023 and 2024, our subscription revenues were $97.3 million and $110.4 million, respectively, representing an 13.4% increase.

For the three months ended July 31, 2023 and 2024, our total revenues were $117.2 million and $132.4 million, respectively, representing a 12.9% increase.

For the three months ended July 31, 2023 and 2024, our subscription revenues were $99.9 million and $113.9 million, respectively, representing a 14.0% increase.

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

of $11.2 million and $3.0 million for the three months ended April 30, 2023 and 2024, respectively.

of $15.9 million and $11.0 million for the three months ended July 31, 2023 and 2024, respectively.

For the six months ended July 31, 2023 and 2024, our total revenues were $230.9 million and $260.5 million, respectively, representing a 12.8% increase.

For the six months ended July 31, 2023 and 2024, our subscription revenues were $197.2 million and $224.3 million, respectively, representing a 13.7% increase.

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

of $27.1 million and $14.0 million for the six months ended July 31, 2023 and 2024, respectively.

Factors Affecting Our Operating Results

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Our success in growing our customer base and expanding adoption of our solutions by existing customers requires a focused direct sales engagement and the ability to convince key decision makers at FIs to replace legacy third-party point solutions or internally developed software with our solutions.

In addition, growing our customer base will require us to increasingly penetrate markets outside the U.S., which accounted for 20.2% of total revenues for the three months ended April 30, 2024.

In addition, growing our customer base will require us to increasingly penetrate markets outside the U.S., which accounted for 20.8% of total revenues for the three months ended July 31, 2024 and 20.5% for the six months ended July 31, 2024.

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

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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.

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 nCino Mortgage business.

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Cost of Subscription Revenues .

Cost of subscription revenues consists of fees paid to Salesforce for access to the Salesforce Platform, including Salesforce’s hosting infrastructure and data center operations, along with certain integration fees

paid to other third parties.

When we resell access to Salesforce’s CRM solution, cost of subscription revenues also includes the subscription fees we remit to Salesforce for providing such access.

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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 Expense, Net.

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

Other Income (Expense), Net.

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

Income Tax Provision (Benefit).

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The results of operations presented below should be reviewed in conjunction with the financial statements and notes included elsewhere in this Quarterly Report on Form 10-Q.

The following tables present our selected unaudited condensed consolidated statements of operations data for three months ended April 30, 2023 and 2024 in both dollars and as a percentage of total revenues, except as noted.

Three Months Ended April 30,

The following tables present our selected unaudited condensed consolidated statements of operations data for three and six months ended July 31, 2023 and 2024 in both dollars and as a percentage of total revenues, except as noted.

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

2023 2024 2023 2024

($ in thousands, except share and per share amounts)

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Interest expense (1,044) (1,835) (2,423) (3,312)

Other expense, net (782) (744)

Other income (expense), net 469 150 (313) (594)

Loss before income taxes (14,534) (9,270) (24,785) (14,549)

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The Company recognized stock-based compensation expense as follows:

Three Months Ended April 30,

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

($ in thousands) 2023 2024 2023 2024

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The Company recognized amortization expense for intangible assets as follows:

Three Months Ended April 30,

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

($ in thousands) 2023 2024 2023 2024

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Total amortization expense $ 7,044 $ 7,349 $ 14,149 $ 14,031

Three Months Ended April 30,

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

2023 2024 2023 2024

Subscription revenues 85.2 % 86.0 % 85.4 % 86.1 %

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Interest expense (0.9) (1.4) (1.0) (1.3)

Other expense, net (0.7) (0.6)

Other income (expense), net 0.4 0.1 (0.1) (0.2)

Loss before income taxes (12.4) (7.1) (10.7) (5.6)

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Net loss (13.7) % (8.4) % (12.0) % (5.1) %

Comparison of the Three Months Ended April 30, 2023 and 2024

Three Months Ended April 30,

Comparison of the Three and Six Months Ended July 31, 2023 and 2024

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

($ in thousands) 2023 2024 2023 2024

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Subscription Revenues

Subscription revenues increased $13.1 million for the three months ended April 30, 2024 compared to the three months ended April 30, 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, 54.5% 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, and 45.5% was attributable to initial revenues from customers who did not contribute to subscription revenues during the three months ended April 30, 2023.

Subscription revenues were 86.2% of total revenues for the three months ended April 30, 2024 compared to 85.6% of total revenues for the three months ended April 30, 2023, primarily due to growth in our installed base.

Subscription revenues increased $14.0 million for the three months ended July 31, 2024 compared to the three months ended July 31, 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, 52.0% was attributable to increased revenues from existing customers as additional seats were activated in accordance with contractual terms and customers expanded their adoption of our solutions, and 48.0% was attributable to initial revenues from customers who did not contribute to subscription revenues during the three months ended July 31, 2023.

Subscription revenues were 86.0% of total revenues for the three months ended July 31, 2024 compared to 85.2% of total revenues for the three months ended July 31, 2023, primarily due to growth in our installed base.

Subscription revenues increased $27.1 million for the six months ended July 31, 2024 compared to the six months ended July 31, 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, 57.1% 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 42.9% was attributable to initial revenues from customers who did not contribute to subscription revenues during the six months ended July 31, 2023.

Subscription revenues were 86.1% of total revenues for the six months ended July 31, 2024 compared to 85.4% of total revenues for the six months ended July 31, 2023, primarily due to growth in our installed base.

Professional Services and Other Revenues

Professional services and other revenues increased $1.3 million for the three months ended April 30, 2024 compared to the three months ended April 30, 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.

Professional services and other revenues increased $1.2 million for the three months ended July 31, 2024 compared to the three months ended July 31, 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.

Professional services and other revenues increased $2.5 million for the six months ended July 31, 2024 compared to the six months ended July 31, 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.

Cost of Revenues and Gross Margin

Three Months Ended April 30,

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

($ in thousands) 2023 2024 2023 2024

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Cost of Subscription Revenues

Cost of subscription revenues increased $2.6 million for the three months ended April 30, 2024 compared to the three months ended April 30, 2023, generating a gross margin for subscription revenues of 71.2% compared to a gross margin of 70.0% for the three months ended April 30, 2023.

Cost of subscription revenues increased $3.6 million for the three months ended July 31, 2024 compared to the three months ended July 31, 2023, generating a gross margin for subscription revenues of 70.7% compared to a gross margin of 70.3% for the three months ended July 31, 2023.

Other costs of subscription revenues increased $1.7 million due to costs associated with access to other platforms and data center costs, and costs related to Salesforce user fees increased $0.8 million as we continued to add new customers and sell additional functionality to existing customers.

Personnel costs, including stock-based compensation expense, increased $1.0 million, mainly from an increase in 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.

Cost of subscription revenues increased $6.3 million for the six months ended July 31, 2024 compared to the six months ended July 31, 2023, generating a gross margin for subscription revenues of 71.0% compared to a gross margin of 70.1% for the six months ended July 31, 2023.

Costs related to Salesforce user fees increased $2.1 million as we continued to add new customers and sell additional functionality to existing customers, and other costs of subscription revenues increased $2.1 million due to costs associated with access to other platforms and data center costs.

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Cost of Professional Services and Other Revenues

Cost of professional services and other revenues increased $2.4 million for the three months ended April 30, 2024 compared to the three months ended April 30, 2023, generating a gross margin for professional services and other revenues of (9.7)% compared to a gross margin of (4.3)% for the three months ended April 30, 2023.

Stock-based compensation expense was $1.6 million and $2.8 million for the three months ended April 30, 2023 and 2024, respectively.

For the three months ended April 30, 2024, personnel costs, including stock-based compensation expense, increased $2.5 million for professional services compared to the three months ended April 30, 2023, mainly from an increase in headcount.

Cost of professional services and other revenues increased $2.2 million for the three months ended July 31, 2024 compared to the three months ended July 31, 2023, generating a gross margin for professional services and other revenues of (11.2)% compared to a gross margin of (5.7)% for the three months ended July 31, 2023.

For the three months ended July 31, 2024, personnel costs, including stock-based compensation expense, increased $1.8 million for professional services compared to the three months ended July 31, 2023, mainly from an increase in headcount.

The increase in cost of professional services and other revenues also included a $0.4 million increase for third-party costs of professional services.

Cost of professional services and other revenues increased $4.6 million for the six months ended July 31, 2024 compared to the six months ended July 31, 2023, generating a gross margin for professional services and other revenues of (10.5)% compared to a gross margin of (5.0)% for the six months ended July 31, 2023.

For the six months ended July 31, 2024, personnel costs, including stock-based compensation expense, increased $4.3 million for professional services compared to the six months ended July 31, 2023, mainly from an increase in headcount.

The increase in cost of professional services and other revenues also included a $0.4 million increase for third-party professional services costs.

Operating Expenses

Three Months Ended April 30,

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

($ in thousands) 2023 2024 2023 2024

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Sales and Marketing

Sales and marketing expenses decreased $1.9 million for the three months ended April 30, 2024 compared to the three months ended April 30, 2023, primarily due to a decrease of $0.6 million in sales-related travel costs, a decrease of $0.6 million in amortization expense due to fully amortizing the remaining trade name intangible asset as a result of the rebranding of the SimpleNexus solution to nCino Mortgage during the third quarter of fiscal 2024, and a decrease of $0.5 million in third-party professional fees.

The decrease in sales and marketing expenses also included a decrease of $0.3 million in marketing costs.

Sales and marketing personnel costs were comparable for the three months ended April 30, 2024 compared to the three months ended April 30, 2023, due to an increase in stock-based compensation expense offset by a decrease in headcount.

Our sales and marketing headcount decreased by 20 from April 30, 2023 to April 30, 2024.

Sales and marketing expenses decreased $0.5 million for the three months ended July 31, 2024 compared to the three months ended July 31, 2023, primarily due to a decrease of $1.3 million in sales and marketing personnel costs due to a decrease in headcount and a decrease in expatriate tax equalization expenses, partially offset by an increase in stock-based compensation expense.

Amortization expense was comparable for the three months ended July 31, 2024 compared to the three months ended July 31, 2023 due to no amortization for the SimpleNexus trade name intangible asset as a result of the rebranding of the SimpleNexus solution to nCino Mortgage during the third quarter of fiscal 2024 offset by increased amortization expense for the DocFox and ILT acquisitions.

The decrease in sales and marketing expenses was partially offset by an increase of $0.6 million in marketing costs and an increase of $0.2 million in third-party professional fees.

Sales and marketing expenses decreased $2.3 million for the six months ended July 31, 2024 compared to the six months ended July 31, 2023, primarily due to a decrease of $1.4 million in personnel costs due to a decrease in headcount and a decrease in expatriate tax equalization expenses, partially offset by an increase in stock-based compensation expense.

The decrease in sales and marketing expenses also included a decrease of $0.6 million in sales-related travel costs and a decrease of $0.3 million in third-party professional fees.

Amortization expense was comparable for the six months ended July 31, 2024 compared to the six months ended July 31, 2023 due to no amortization for the SimpleNexus trade name intangible asset as a result of the rebranding of the SimpleNexus solution to nCino Mortgage during the third quarter of fiscal 2024 offset by increased amortization expense for the DocFox and ILT acquisitions.

The decrease in sales and marketing expenses was partially offset by an increase of $0.3 million in marketing costs.

Our sales and marketing headcount decreased by 10 from July 31, 2023 to July 31, 2024.

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 $1.8 million for the three months ended April 30, 2024 compared to the three months ended April 30, 2023, primarily due to an increase of $2.0 million in personnel costs, mainly from an increase in headcount and a $1.2 million increase in stock-based compensation expense.

Our research and development headcount increased by 9 from April 30, 2023 to April 30, 2024.

Research and development expenses increased $4.4 million for the three months ended July 31, 2024 compared to the three months ended July 31, 2023, primarily due to an increase of $3.3 million in personnel costs, mainly from an increase in headcount and an increase in stock-based compensation expense.

The increase in research and development also included an increase of $1.1 million in third-party professional fees primarily attributable to increased contract research and development spend.

Research and development expenses increased $6.2 million for the six months ended July 31, 2024 compared to the six months ended July 31, 2023, primarily due to an increase of $5.3 million in personnel costs, mainly from the increase in headcount and an increase in stock-based compensation expense.

The increase in research and development also included an increase of $0.9 million in third-party professional fees primarily attributable to increased contract research and development spend.

Our research and development headcount increased by 10 from July 31, 2023 to July 31, 2024.

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 $4.6 million for the three months ended April 30, 2024 compared to the three months ended April 30, 2023, primarily due to an increase of $3.0 million in third party professional fees and expenses related to the acquisitions of DocFox and ILT, partially offset by decreases in fees and expenses related to other litigation expenses including the closure of the government antitrust investigation and settlement of the related civil action (the "Antitrust Matters") disclosed in Note 12 "Commitments and Contingencies" of Part I, Item I of this Quarterly Report on Form 10-Q and a decrease in other professional fees.

The increase in general and administrative expenses for the three months ended April 30, 2024 compared to the three months ended April 30, 2023 also included an increase of $2.1 million in personnel costs, mostly attributable to an increase of $2.0 million in stock-based compensation expense.

General and administrative expenses decreased $1.5 million for the three months ended July 31, 2024 compared to the three months ended July 31, 2023, primarily due to a decrease of $2.4 million in third-party professional fees and expenses related to other litigation expenses, partially offset by an increase for acquisition-related expenses for DocFox and ILT.

The decrease in general and administrative expenses for the three months ended July 31, 2024 compared to the three months ended July 31, 2023 also included a decrease of $0.9 million in allocated overhead and other general and administrative costs.

The decrease in general and administrative expenses was partially offset by an increase of $1.6 million in personnel costs, mostly attributable to a $1.4 million increase in stock-based compensation expense.

General and administrative expenses increased $3.0 million for the six months ended July 31, 2024 compared to the six months ended July 31, 2023, primarily due to an increase of $3.7 million in personnel costs, mostly attributable to a $3.3 million increase in stock-based compensation expense.

The increase in general and administrative spend also included an increase of $0.6 million in third party professional fees for the six months ended July 31, 2024 compared to the six months ended July 31, 2023, mostly attributable to an increase in third party professional fees and acquisition-related expenses for DocFox and ILT, offset by a decrease in fees and expenses related to other litigation expenses.

The increase in general and administrative expenses was partially offset by a decrease of $1.4 million in allocated overhead and other general and administrative costs.

Our general and administrative headcount increased by 2 from April 30, 2023 to April 30, 2024.

Our general and administrative headcount decreased by 2 from July 31, 2023 to July 31, 2024.

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

Non-Operating Income (Expense)

Three Months Ended April 30,

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

($ in thousands) 2023 2024 2023 2024

1 unchanged sentence

Interest expense (1,044) (0.9) (1,835) (1.4) (2,423) (1.0) (3,312) (1.3)

Other expense, net (782) (0.7) (744) (0.6)

Non-operating income (expense) for the three months ended April 30, 2024 was essentially flat as compared to the three months ended April 30, 2023.

Other income (expense), net 469 0.4 150 0.1 (313) (0.1) (594) (0.2)

Interest income decreased $0.5 million for the three months ended July 31, 2024 compared to the three months ended July 31, 2023, due to a decrease in our accounts earning interest.

Interest expense increased $0.8 million for the three months ended July 31, 2024 compared to the three months ended July 31, 2023, due to borrowing on our revolving credit facility.

The decrease of $0.3 million in other income, net for the three months ended July 31, 2024 compared to the three months ended July 31, 2023, was primarily driven by intercompany loans and transactions that are denominated in currencies other than the underlying functional currency of the applicable entity.

Interest income decreased $0.4 million for the six months ended July 31, 2024 compared to the six months ended July 31, 2023, due to a decrease in our accounts earning interest.

Interest expense increased $0.9 million for the six months ended July 31, 2024 compared to the six months ended July 31, 2023, due to borrowing on our revolving credit facility.

The increase of $0.3 million in other expense, net for the six months ended July 31, 2024 compared to the six months ended July 31, 2023, 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 (Benefit)

Three Months Ended April 30,

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

($ in thousands) 2023 2024 2023 2024

Income tax provision (benefit) $ 1,545 1.3 % $ 1,753 1.3 % $ 2,938 1.3 % $ (1,229) (0.5) %

Income tax benefit was $3.0 million for the three months ended April 30, 2024 compared to a provision of $1.4 million for the three months ended April 30, 2023, and resulted in an effective tax rate of 56.5% and (13.6)%, respectively.

change in the effective tax rate for the three months ended April 30, 2024 compared to the effective tax rate for the three months ended April 30, 2023 was primarily due to a reduction of our valuation allowance.

Income tax provision was $1.8 million for the three months ended July 31, 2024 compared to a provision of $1.5 million for the three months ended July 31, 2023, and resulted in an effective tax rate of (18.9)% and (10.6)%, respectively.

Income tax benefit was $1.2 million for the six months ended July 31, 2024 compared to a provision of $2.9 million for the six months ended July 31, 2023, and resulted in an effective tax rate of 8.4% and (11.9)%, respectively.

The change in the effective tax rate for the six months ended July 31, 2024 compared to the effective tax rate for the six months ended July 31, 2023 was primarily due to a reduction of our valuation allowance.

Prior to the DocFox acquisition, we continued to maintain a valuation allowance against our deferred tax assets in several jurisdictions, including the U.S.

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deferred tax assets are realizable.

As a result, the Company reduced the valuation allowance by $3.6 million during the three months ended April 30, 2024.

As a result, the Company reduced the valuation allowance by $3.6 million during the first quarter of the Company’s fiscal 2025.

Non-GAAP Financial Measure

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

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.

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

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

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

Three Months Ended April 30,

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

($ in thousands) 2023 2024 2023 2024

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Litigation expenses 1

3,204 69 4,349 250

Restructuring and related charges 238 — 477 —

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Non-GAAP operating income $ 11,185 $ 19,298 $ 22,123 $ 43,743

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

1 Represents legal expenses related to a closed government antitrust investigation and related settled civil action and a shareholder derivative lawsuit.

Liquidity and Capital Resources

As of April 30, 2024, we had $129.5 million in cash and cash equivalents, and an accumulated deficit of $354.9 million.

As of July 31, 2024, we had $121.4 million in cash and cash equivalents, and an accumulated deficit of $365.9 million.

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.

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

In April 2024, we repaid $20.0 million under the Credit Facility.

As of April 30, 2024, the applicable interest rate was 7.36%.

The Company had $55.0 million outstanding and no letters of credit issued under the Credit Facility and was in compliance with all covenants as of April 30, 2024.

In April 2024 and July 2024, we repaid $20.0 million and $15.0 million, respectively, under the Credit Facility.

As of July 31, 2024, the applicable interest rate was 7.38%.

The Company had $40.0 million outstanding and no letters of credit issued under the Credit Facility and was in compliance with all covenants as of July 31, 2024.

See Note 11 "Revolving Credit Facility" of the notes to our unaudited condensed consolidated financial statements included in Part I, Item I of this Quarterly Report on Form 10-Q for more information.

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and the Company.

The balance of the

redeemable non-controlling interest is reported on our balance sheet below total liabilities but above stockholders’ equity at the greater of the initial carrying amount adjusted for the redeemable non-controlling interest’s share of earnings or losses and other comprehensive income or loss, or its estimated redemption value.

As of January 31, 2024 and April 30, 2024, the redeemable non-controlling interest was $3.4 million and $4.1 million, respectively.

The balance of the redeemable non-controlling interest is reported on our balance sheet below total liabilities but above stockholders’ equity at the greater of the initial carrying amount adjusted for the redeemable non-controlling interest’s share of earnings or losses and other comprehensive income or loss, or its estimated redemption value.

As of January 31, 2024 and July 31, 2024, the redeemable non-controlling interest was $3.4 million and $4.1 million, respectively.

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 the three months ended April 30, 2023 and 2024 are set forth below:

Three Months Ended April 30,

Summary Cash Flow information for the six months ended July 31, 2023 and 2024 are set forth below:

Six Months Ended July 31,

($ in thousands) 2023 2024

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Net Cash Provided by Operating Activities

The $54.4 million provided by operating activities in the three months ended April 30, 2024 reflects our net loss of $2.3 million, offset by $30.7 million generated by changes in working capital accounts and $26.0 million in non-cash charges.

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

Cash generated by working capital accounts was principally a function of a $37.5 million decrease in accounts receivable due to the timing of billings and collections from customers, a $6.2 million increase in deferred revenue due to the timing of billings and revenue recognition, and a $3.8 million increase in accounts payable which includes acquisition related expenses.

The cash generated by working capital accounts was partially offset by a $8.2 million decrease in accrued expenses and other liabilities primarily due to the payout of bonuses and commissions, an increase of $5.1 million of capitalized costs to obtain revenue contracts, which consisted primarily of sales commissions, a $2.1 million increase in prepaid expenses and other assets, and a $1.4 million decrease in operating lease liabilities.

The $31.3 million provided by operating activities in the three months ended April 30, 2023 reflects our net loss of $11.6 million, offset by $24.7 million in non-cash charges and $18.3 million generated by changes in working capital accounts.

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

Cash generated by working capital accounts was principally a function of a $18.3 million decrease in accounts receivable due to timing of billings and collections from customers and a $16.8 million increase in deferred revenue, as we expanded our customer base and renewed existing customers.

The $59.4 million provided by operating activities in the six months ended July 31, 2024 reflects our net loss of $13.3 million, offset by $58.4 million in non-cash charges and $14.3 million generated by changes in working capital accounts.

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

Cash generated by working capital accounts was principally a function of a $37.8 million decrease in accounts receivable due to the timing of billings and collections from customers, and a $0.8 million increase in accounts payable.

The cash generated by working capital accounts was partially offset by an $8.6 million decrease in accrued expenses and other liabilities primarily due to the payout of bonuses and commissions, an increase of $8.4 million of capitalized costs to obtain revenue contracts, which consisted primarily of sales commissions, a $2.6 million decrease in deferred revenue due to the timing of billings and revenue recognition, a $2.4 million increase in prepaid expenses and other assets, and a $2.2 million decrease in operating lease liabilities.

The $43.3 million provided by operating activities in the six months ended July 31, 2023 reflects our net loss of $27.7 million, offset by $53.5 million in non-cash charges and $17.5 million generated by changes in working capital accounts.

Cash generated by working capital accounts was principally a function of a $18.4 million decrease in accounts receivable due to timing of billings and collections from customers and a $13.8 million increase in deferred revenue, as we expanded our

customer base and renewed existing customers, and a $1.1 million decrease in prepaid expenses and other assets.

The cash generated by working capital accounts was partially offset by a $9.3 million decrease in accrued expenses and other liabilities which includes payments of approximately $5.0 million for severance and other employee costs associated with restructuring.

Additional offsets were a $1.2 million increase in prepaid expenses and other assets, payments of $1.0 million of capitalized costs to obtain revenue contracts, which consisted primarily of sales commissions, a $1.0 million decrease in operating lease liabilities, and a $0.3 million decrease in accounts payable.

Additional offsets were payments of $3.0 million of capitalized costs to obtain revenue contracts, which consisted primarily of sales commissions, a $2.0 million decrease in operating lease liabilities, and a $1.4 million decrease in accounts payable.

Net Cash Used in Investing Activities

The $91.2 million used in investing activities in the three months ended April 30, 2024 was comprised of $90.7 million used for the acquisitions of DocFox and ILT, $0.3 million for the purchase of property and equipment and leasehold improvements to support the expansion of our business, and $0.2 million for an asset acquisition.

The $2.0 million used in investing activities in the three months ended April 30, 2023 was comprised of $1.6 million for the purchase of property and equipment and leasehold improvements to support the expansion of our business and $0.4 million for the final cash consideration relating to an asset acquisition completed in August 2022.

The $91.9 million used in investing activities in the six months ended July 31, 2024 was comprised of $90.8 million used for the acquisitions of DocFox and ILT, $0.8 million for the purchase of property and equipment and leasehold improvements to support the expansion of our business, and $0.3 million for an asset acquisition.

The $2.8 million used in investing activities in the six months ended July 31, 2023 was comprised of $2.5 million for the purchase of property and equipment and leasehold improvements to support the expansion of our business and $0.4 million for the final cash consideration relating to an asset acquisition completed in August 2022.

Net Cash Provided by (Used in) Financing Activities

The $56.0 million provided by financing activities in the three months ended April 30, 2024 was comprised principally of $75.0 million proceeds from borrowings on the Credit Facility to fund the acquisition of DocFox and $1.6 million of proceeds from the exercise of stock options.

The $43.2 million provided by financing activities in the six months ended July 31, 2024 was comprised principally of $75.0 million proceeds from borrowings on the Credit Facility to fund the acquisition of DocFox, $2.5 million of proceeds from stock issuances under the employee stock purchase plan, and $1.7 million of proceeds from the exercise of stock options.

The cash provided by financing activities was partially offset by payments of $35.0 million on the Credit Facility, principal payments of $0.7 million on financing obligations, and payments of debt issuance costs of $0.4 million.

The $13.9 million used in financing activities in the three months ended April 30, 2023 was comprised principally of payments of $15.0 million on the Credit Facility and principal payments of $0.2 million on financing obligations.

The cash used in financing activities was partially offset by $1.4 million of proceeds from the exercise of stock options.

The $25.7 million used in financing activities in the six months ended July 31, 2023 was comprised principally of payments of $30.0 million on the Credit Facility and principal payments of $0.6 million on financing obligations, partially offset by $2.7 million of proceeds from stock issuances under the employee stock purchase plan, and $2.2 million of proceeds from the exercise of stock options.

Contractual Obligations and Commitments

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What changed 10-Q

Item 2. Management’s Discussion and Analysis