On Thursday, KeyBanc affirmed its Sector Weight rating on nCino Inc. (NASDAQ:NCNO) following the company's first-quarter financial performance, which surpassed Wall Street's revenue expectations by 1%. The report highlighted that nCino's non-GAAP operating profit and margin also exceeded analyst projections, with a significant 31% upside. This positive outcome was partly due to the timing of expenses, which led to a revised, albeit modest, increase in the expense guidance.
nCino's sales commentary revealed that the momentum from the previous quarter continued, with gross sales exceeding the company's own plans. This follows expectations set earlier that net sales for the fiscal year 2025 would be 50% higher than in fiscal year 2024. Despite these strong sales figures and the revenue beat in the first quarter, nCino chose not to adjust its revenue guidance for both total and subscription revenues. This decision reflects a cautious stance due to concerns about potential customer churn, although the guidance for the dollar amount of churn remained the same.
The company did, however, update its guidance for non-GAAP operating income and earnings per share (EPS), both of which were revised upwards. KeyBanc anticipates that the stock might experience a downturn as investors react to the unchanged revenue guidance coupled with the first-quarter revenue outperformance. This sentiment is influenced by the observation that software industry leaders have reported deteriorating macroeconomic conditions and sales cycles, which could contribute to investor wariness towards uncertainty in financial forecasts.
KeyBanc's outlook for nCino's future financials has been adjusted in light of the first-quarter results and the updated expense timing. The firm has increased its revenue estimate for fiscal year 2025 and slightly raised the revenue forecast for fiscal year 2026 based on current sales trends. However, the estimate for non-GAAP operating income for fiscal year 2026 has been reduced due to the anticipation of higher operating expenses.
InvestingPro Insights
As nCino Inc. (NASDAQ:NCNO) navigates through its financial journey, real-time data from InvestingPro offers a closer look into the company's valuation and performance metrics. With a market capitalization of $3.45 billion, nCino is currently trading at a high revenue valuation multiple, reflecting expectations of its future growth. Analysts have taken note of the company's potential, with 10 analysts revising their earnings upwards for the upcoming period, signaling confidence in nCino's earnings trajectory.
InvestingPro Tips indicate that nCino is expected to grow its net income this year, which aligns with KeyBanc's revised non-GAAP operating income and EPS guidance. Additionally, the company operates with a moderate level of debt, which may provide some financial flexibility as it aims to scale operations. While nCino does not pay a dividend, indicating a reinvestment strategy back into the company, its revenue growth over the last twelve months was a solid 16.71%, showcasing its ability to expand its financial base in a competitive market.
For readers interested in a deeper analysis, there are additional InvestingPro Tips available for nCino, which can be found at https://www.investing.com/pro/NCNO. These tips may provide further insights into the company's financial health and outlook. To access these insights and more, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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