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Maker of operating system for banks nCino (NASDAQ:NCNO) reported Q3 FY2024 results exceeding Wall Street analysts' expectations, with revenue up 15.8% year on year to $121.9 million. Revenue guidance for the full year also exceeded analysts' estimates but next quarter's guidance of $124.5 million was less impressive, coming in 0.9% below expectations.
Is now the time to buy nCino? Find out by reading the original article on StockStory.
nCino (NCNO) Q3 FY2024 Highlights:
- Revenue: $121.9 million vs analyst estimates of $120.6 million (1.1% beat)
- EPS (non-GAAP): $0.14 vs analyst estimates of $0.11 (28% beat)
- Revenue Guidance for Q4 2024 is $124.5 million at the midpoint, below analyst estimates of $125.6 million
- Free Cash Flow of $5.25 million, down 52.7% from the previous quarter
- Gross Margin (GAAP): 60.6%, up from 59% in the same quarter last year
Banking SoftwareConsumers these days are accustomed to frictionless digital experiences from online shopping to ordering food or hailing a cab. Financial services firms are notoriously risk averse in adopting modern software, often lacking the resources or competency to develop the digital solutions in-house. That drives demand for software as a service platforms that allows banks and other finance institutions to offer the digital services without having to run or maintain them.
Sales GrowthAs you can see below, nCino's revenue growth has been very strong over the last two years, growing from $70.04 million in Q3 FY2022 to $121.9 million this quarter.
This quarter, nCino's quarterly revenue was once again up 15.8% year on year. We can see that nCino's revenue increased by $4.71 million quarter on quarter, which is a solid improvement from the $3.56 million increase in Q2 2024. Shareholders should applaud the acceleration of growth.
Next quarter, nCino is guiding for a 12.3% year-on-year revenue decline to $124.5 million, a further deceleration from the 45.7% year-on-year decrease it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 15% over the next 12 months before the earnings results announcement.
Cash Is KingIf you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. nCino's free cash flow came in at $5.25 million in Q3, turning positive over the last year.
nCino has generated $18.68 million in free cash flow over the last 12 months, a decent 3.7% of revenue. This FCF margin stems from its asset-lite business model and gives it a decent amount of cash to reinvest in its business.
Key Takeaways from nCino's Q3 Results Sporting a market capitalization of $3.36 billion, nCino is among smaller companies, but its more than $100.5 million in cash on hand and positive free cash flow over the last 12 months puts it in an attractive position to invest in growth.
It was good to nCino beat narrowly on revenue and improve its gross margin this quarter. On the other hand, its revenue guidance for next quarter underwhelmed, and this seems to be driving the stock's weakness. The company is down 2% on the results and currently trades at $29.38 per share.
