What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-12-04 compared with 2024-08-27 · 111 added, 97 removed, 306 unchanged (40% of the section changed)

31 unchanged sentences

See Note 7 "Business Combinations" of the notes to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information on the DocFox and ILT acquisitions.

In November 2024, we acquired Artesian Solutions Limited, operating as ("FullCircl"), a UK-based SaaS platform built to help financial institutions automate and accelerate onboarding and improve client lifecycle management.

We funded $129.7 million of the purchase consideration with borrowings made in October 2024 under the 2024 Credit Facility as further described in Note 11 "Revolving Credit Facility" of the notes to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

See Note 15 "Subsequent Event" of the notes to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information on the FullCircl acquisition.

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.

3 unchanged sentences

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

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

As of October 31, 2024, we had 205 sales and sales support personnel in the U.S.

and 99 sales and support personnel in offices outside the U.S.

3 unchanged sentences

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

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.

For the three months ended October 31, 2023 and 2024, our total revenues were $121.9 million and $138.8 million, respectively, representing a 13.8% increase.

For the three months ended October 31, 2023 and 2024, our subscription revenues were $104.8 million and $119.9 million, respectively, representing a 14.4% increase.

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

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.

of $16.4 million and $5.3 million for the three months ended October 31, 2023 and 2024, respectively.

For the nine months ended October 31, 2023 and 2024, our total revenues were $352.9 million and $399.3 million, respectively, representing a 13.2% increase.

For the nine months ended October 31, 2023 and 2024, our subscription revenues were $302.0 million and $344.2 million, respectively, representing a 14.0% 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.

of $43.5 million and $19.3 million for the nine months ended October 31, 2023 and 2024, respectively.

Factors Affecting Our Operating Results

2 unchanged sentences

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 20.8% of total revenues for the three months ended July 31, 2024 and 20.5% for the six months ended July 31, 2024.

In addition, growing our customer base will require us to increasingly penetrate markets outside the U.S., which accounted for 21.3% of total revenues for the three months ended October 31, 2024 and 20.8% for the nine months ended October 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.

2 unchanged sentences

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 months to 18 months, depending on the 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.

3 unchanged sentences

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.

26 unchanged sentences

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 nCino Mortgage 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.

36 unchanged sentences

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).

Income tax provision (benefit) consists of federal and state income taxes in the U.S.

Income Tax Provision.

Income tax provision consists of federal and state income taxes in the U.S.

and income taxes in foreign jurisdictions.

1 unchanged sentence

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 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,

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

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

2023 2024 2023 2024

19 unchanged sentences

Loss before income taxes (15,395) (1,563) (40,180) (16,112)

Income tax provision (benefit) 1,545 1,753 2,938 (1,229)

Income tax provision 1,782 2,589 4,720 1,360

Net loss (17,177) (4,152) (44,900) (17,472)

8 unchanged sentences

The Company recognized stock-based compensation expense as follows:

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

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

($ in thousands) 2023 2024 2023 2024

6 unchanged sentences

The Company recognized amortization expense for intangible assets as follows:

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

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

($ in thousands) 2023 2024 2023 2024

3 unchanged sentences

Total amortization expense $ 16,952 $ 7,357 $ 31,101 $ 21,388

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

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

2023 2024 2023 2024

18 unchanged sentences

Loss before income taxes (12.6) (1.1) (11.3) (3.9)

Income tax provision (benefit) 1.3 1.3 1.3 (0.5)

Income tax provision 1.5 1.9 1.3 0.3

Net loss (14.1) % (3.0) % (12.6) % (4.2) %

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

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

Comparison of the Three and Nine Months Ended October 31, 2023 and 2024

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

($ in thousands) 2023 2024 2023 2024

3 unchanged sentences

Subscription Revenues

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.

Subscription revenues increased $15.1 million for the three months ended October 31, 2024 compared to the three months ended October 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, 64.1% 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 35.9% was attributable to initial revenues from customers who did not contribute to subscription revenues during the three months ended October 31, 2023.

Subscription revenues were 86.4% of total revenues for the three months ended October 31, 2024 compared to 85.9% of total revenues for the three months ended October 31, 2023, primarily due to growth in our installed base.

Subscription revenues increased $42.2 million for the nine months ended October 31, 2024 compared to the nine months ended October 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, 67.4% 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 32.6% was attributable to initial revenues from customers who did not contribute to subscription revenues during the nine months ended October 31, 2023.

Subscription revenues were 86.2% of total revenues for the nine months ended October 31, 2024 compared to 85.6% of total revenues for the nine months ended October 31, 2023, primarily due to growth in our installed base.

Professional Services and Other Revenues

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.

Professional services and other revenues increased $1.7 million for the three months ended October 31, 2024 compared to the three months ended October 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 $4.2 million for the nine months ended October 31, 2024 compared to the nine months ended October 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 July 31, Six Months Ended July 31,

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

($ in thousands) 2023 2024 2023 2024

5 unchanged sentences

Cost of Subscription Revenues

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.

Cost of subscription revenues increased $3.2 million for the three months ended October 31, 2024 compared to the three months ended October 31, 2023, generating a gross margin for subscription revenues of 71.8% compared to a gross margin of 70.8% for the three months ended October 31, 2023.

Other costs of subscription revenues increased $1.4 million due to costs associated with access to other platforms and data center costs, as we continued to add new customers and sell additional functionality to existing customers.

Personnel costs, including stock-based compensation expense, increased $1.2 million, mainly from an increase in headcount.

The increase in cost of subscription revenues also included an increase of $0.5 million in allocated overhead costs due to growth supporting our business.

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.

Cost of subscription revenues increased $9.4 million for the nine months ended October 31, 2024 compared to the nine months ended October 31, 2023, generating a gross margin for subscription revenues of 71.3% compared to a gross margin of 70.4% for the nine months ended October 31, 2023.

Other costs of subscription revenues increased $3.5 million due to costs associated with access to other platforms and data center costs and costs related to Salesforce user fees increased $2.2 million as we continued to add new customers and sell additional functionality to existing customers.

Personnel costs, including stock-based compensation expense, increased $3.3 million, mainly from an increase in headcount.

The increase in cost of subscription revenues also included an increase of $0.5 million in allocated overhead costs due to growth supporting our business.

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 Professional Services and Other Revenues

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.

Cost of professional services and other revenues increased $2.6 million for the three months ended October 31, 2024 compared to the three months ended October 31, 2023, generating a gross margin for professional services and other revenues of (5.7)% compared to a gross margin of (1.4)% for the three months ended October 31, 2023.

For the three months ended October 31, 2024, personnel costs, including stock-based compensation expense, increased $1.9 million for professional services compared to the three months ended October 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.

Cost of professional services and other revenues increased $7.2 million for the nine months ended October 31, 2024 compared to the nine months ended October 31, 2023, generating a gross margin for professional services and other revenues of (8.8)% compared to a gross margin of (3.8)% for the nine months ended October 31, 2023.

For the nine months ended October 31, 2024, personnel costs, including stock-based compensation expense, increased $6.2 million for professional services compared to the nine months ended October 31, 2023, mainly from an increase in headcount.

The increase in cost of professional services and other revenues also included a $0.8 million increase for third-party professional services costs.

Operating Expenses

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

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

($ in thousands) 2023 2024 2023 2024

6 unchanged sentences

Sales and Marketing

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.

Sales and marketing expenses decreased $8.7 million for the three months ended October 31, 2024 compared to the three months ended October 31, 2023, primarily attributable to the decrease in amortization expense of $10.7 million 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, partially offset by an increase of $0.6 million in amortization expense for the DocFox and ILT acquisitions.

The decrease in sales and marketing expenses was also partially offset by an increase of $1.0 million in personnel costs primarily due to an increase in headcount, an increase in stock-based compensation expense, and

an increase in tax equalization expense, partially offset by prior year payroll tax adjustments from certain of our foreign subsidiaries.

Sales and marketing expenses decreased $11.1 million for the nine months ended October 31, 2024 compared to the nine months ended October 31, 2023, primarily attributable to the decrease in amortization expense of $11.9 million 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 fiscal 2024, partially offset by an increase of $1.7 million in amortization expense for the DocFox and ILT acquisitions.

The decrease in sales and marketing expenses also included a decrease of $0.5 million in sales-related travel costs, a decrease of $0.3 million in allocated overhead costs, and a decrease of $0.4 million in personnel costs.

The decrease in personnel costs was due to prior year payroll tax adjustments from certain of our foreign subsidiaries offset by an increase in stock-based compensation expense.

The decrease in sales and marketing expenses was partially offset by an increase of $0.5 million in marketing costs.

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

Our sales and marketing headcount increased by 7 from October 31, 2023 to October 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 $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.

Research and development expenses increased $4.0 million for the three months ended October 31, 2024 compared to the three months ended October 31, 2023, primarily due to an increase of $2.6 million in personnel costs, mainly from an increase in headcount.

The increase in research and development also included an increase of $1.0 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.

Research and development expenses increased $10.2 million for the nine months ended October 31, 2024 compared to the nine months ended October 31, 2023, primarily due to an increase of $7.9 million in personnel costs, mainly from an increase in headcount and stock-based compensation expense.

The increase in research and development also included an increase of $1.9 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.

Our research and development headcount increased by 24 from October 31, 2023 to October 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 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.

General and administrative expenses increased $3.8 million for the three months ended October 31, 2024 compared to the three months ended October 31, 2023, primarily due to an increase of $2.5 million in personnel costs, mostly attributable to a $1.5 million increase in stock-based compensation expense and headcount.

The increase in general and administrative spend also included an increase of $2.1 million in third-party professional fees, mostly attributable to an increase for acquisition-related expenses for DocFox, ILT, and FullCircl, partially offset by a decrease in other professional fees.

The increase in general and administrative expenses was partially offset by a decrease of $0.8 million in allocated overhead and other general and administrative costs.

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

General and administrative expenses increased $6.8 million for the nine months ended October 31, 2024 compared to the nine months ended October 31, 2023, primarily due to an increase of $6.2 million in personnel costs, mostly attributable to a $4.8 million increase in stock-based compensation expense and headcount.

The increase in general and administrative spend also included an increase of $2.7 million in third-party professional fees, mostly attributable to an increase for acquisition-related expenses for DocFox, ILT and FullCircl, partially offset by a decrease in expenses related to litigation expenses and other professional fees.

The increase in general and administrative expenses was partially offset by a decrease of $2.2 million in allocated overhead and other general and administrative costs.

Our general and administrative headcount increased by 15 from October 31, 2023 to October 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 July 31, Six Months Ended July 31,

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

($ in thousands) 2023 2024 2023 2024

2 unchanged sentences

Other income (expense), net (2,320) (1.9) 432 0.3 (2,633) (0.7) (162) —

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 July 31, Six Months Ended July 31,

Interest income decreased $0.2 million for the three months ended October 31, 2024 compared to the three months ended October 31, 2023, due to a decrease in our accounts earning interest.

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

The decrease of $2.8 million in other income (expense), net for the three months ended October 31, 2024 compared to the three months ended October 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 $0.6 million for the nine months ended October 31, 2024 compared to the nine months ended October 31, 2023, due to a decrease in our accounts earning interest.

Interest expense increased $1.7 million for the nine months ended October 31, 2024 compared to the nine months ended October 31, 2023, due to borrowing on our revolving credit facility.

The decrease of $2.5 million in other expense, net for the nine months ended October 31, 2024 compared to the nine months ended October 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

Three Months Ended October 31, Nine Months Ended October 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 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.

Income tax provision $ 1,782 1.5 % $ 2,589 1.9 % $ 4,720 1.3 % $ 1,360 0.3 %

Income tax provision was $2.6 million for the three months ended October 31, 2024 compared to a provision of $1.8 million for the three months ended October 31, 2023, and resulted in an effective tax rate of (165.6)% and (11.6)%, respectively.

Income tax provision was $1.4 million for the nine months ended October 31, 2024 compared to a provision of $4.7 million for the nine months ended October 31, 2023, and resulted in an effective tax rate of (8.4)% and (11.7)%, respectively.

The change in the effective tax rate for the nine months ended October 31, 2024 compared to the effective tax rate for the nine months ended October 31, 2023 was primarily due to a reduction of our valuation allowance offset by profitable foreign jurisdictions and uncertain tax positions.

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

9 unchanged sentences

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.

Although the calculation of non-GAAP financial measures may vary from company to company, our detailed

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

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

7 unchanged sentences

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 July 31, Six Months Ended July 31,

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

($ in thousands) 2023 2024 2023 2024

8 unchanged sentences

Non-GAAP operating income $ 20,383 $ 28,042 $ 42,506 $ 71,785

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

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

Liquidity and Capital Resources

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

As of October 31, 2024, we had $257.9 million in cash and cash equivalents.

In November 2024, we used approximately $129.7 million of our cash for the FullCircl acquisition.

As of October 31, 2024, we had an accumulated deficit of $369.8 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.

5 unchanged sentences

In March 2024, we borrowed $75.0 million under the 2022 Credit Facility to fund the acquisition of DocFox.

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.

In April 2024, July 2024, and October 2024 we repaid $20.0 million,

$15.0 million, and $10.0 million, respectively, under the 2022 Credit Facility.

On October 28, 2024, the Company entered into the 2024 Credit Facility, which increased our borrowing availability to $250.0 million.

The Company borrowed $166.0 million under the 2024 Credit Facility to fund the acquisition of FullCircl and repay the $30.0 million outstanding under the 2022 Credit Facility.

The Company expects to pay an additional $15.0 million in two years for the FullCircl acquisition upon the satisfaction and performance of certain warranties and covenants.

As of October 31, 2024, the applicable interest rate was 6.72%.

The Company had $166.0 million outstanding and no letters of credit issued under the 2024 Credit Facility and was in compliance with all covenants as of October 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.

1 unchanged sentence

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 to incur capital expenditures in fiscal 2025 for planned office build-outs to accommodate our growth, primarily for an international office, which we estimate to be approximately $8.0 million.

We expect to incur capital expenditures in fiscal 2025 and 2026 for planned office build-outs to accommodate our growth, primarily for an international office, which we estimate to spend approximately $2.0 million and $6.0 million in fiscal 2025 and 2026, respectively.

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

7 unchanged sentences

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

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

As of January 31, 2024 and October 31, 2024, the redeemable non-controlling interest was $3.4 million and $5.2 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 six months ended July 31, 2023 and 2024 are set forth below:

Six Months Ended July 31,

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

Nine Months Ended October 31,

($ in thousands) 2023 2024

3 unchanged sentences

Net Cash Provided by Operating Activities

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 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.

The $65.2 million provided by operating activities in the nine months ended October 31, 2024 reflects our net loss of $17.5 million, offset by $88.7 million in non-cash charges and $6.0 million used in 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, partially offset by deferred income taxes and foreign currency losses related to intercompany loans and transactions.

Cash used in working capital accounts was principally a function of a $41.6 million decrease in deferred revenue due to the timing of billings and revenue recognition, and an increase of $13.2 million of capitalized costs to obtain revenue contracts, which consisted primarily of sales commissions, a $2.9 million decrease in operating lease liabilities, and a $0.1 million decrease in accrued expenses and other liabilities.

The cash used in

working capital accounts was partially offset by a $50.2 million decrease in accounts receivable due to the timing of billings and collections from customers, a $1.1 million increase in accounts payable, and a $0.7 million decrease in prepaid expenses and other assets.

The $49.1 million provided by operating activities in the nine months ended October 31, 2023 reflects our net loss of $44.9 million and $0.8 million used in changes in working capital accounts, offset by $94.8 million in non-cash charges.

Cash generated by working capital accounts was principally a function of a $35.5 million decrease in accounts receivable due to timing of billings and collections from customers and a $3.4 million decrease in prepaid expenses and other assets, and a $1.2 million increase in accounts payable.

The cash generated by working capital accounts was offset by a $23.8 million decrease in deferred revenue, due to the timing of billings and revenue recognition and an $8.0 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.

Additional offsets were payments of $6.0 million of capitalized costs to obtain revenue contracts, which consisted primarily of sales commissions, and a $3.1 million decrease in operating lease liabilities.

Net Cash Used in Investing Activities

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.

The $92.8 million used in investing activities in the nine months ended October 31, 2024 was comprised of $90.8 million used for the acquisitions of DocFox and ILT, $1.5 million for the purchase of property and equipment and leasehold improvements to support the expansion of our business, and $0.5 million for an asset acquisition.

The $5.9 million used in investing activities in the nine months ended October 31, 2023 was comprised of $3.1 million for the purchase of property and equipment and leasehold improvements to support the expansion of our business, $2.5 million for the purchase of preferred stock in Rich Data Co, 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 $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 $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.

The $168.4 million provided by financing activities in the nine months ended October 31, 2024 was comprised principally of $241.0 million proceeds from borrowings on the 2022 and 2024 Credit Facility to fund the acquisition of DocFox and FullCircl, $2.5 million of proceeds from stock issuances under the employee stock purchase plan, and $2.2 million of proceeds from the exercise of stock options.

The cash provided by financing activities was partially offset by payments of $75.0 million on the 2022 Credit Facility, payments of debt issuance costs of $1.4 million, and principal payments of $0.9 million on financing obligations.

The $24.0 million used in financing activities in the nine months ended October 31, 2023 was comprised principally of payments of $30.0 million on the Credit Facility and principal payments of $0.9 million on financing obligations.

The cash used in financing activities was partially offset by $3.2 million of proceeds from the exercise of stock options, $2.7 million of proceeds from stock issuances under the employee stock purchase plan, and $1.0 million in proceeds from the non-controlling interest in our Japan Joint venture.

Contractual Obligations and Commitments

10 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis