NCNO: Bearish Signals Point to Potential Put Play

nCino provides a cloud-based platform that enables financial institutions ('FIs') to streamline operations and enhance customer experiences. The 'nCino Platform' offers solutions for client onboarding, loan origination (commercial, consumer, small business, and mortgage), account opening, and portfolio management. It integrates AI and data analytics to improve decision-making, risk management, and customer satisfaction. nCino targets a diverse range of FIs globally, from global institutions like 'Bank of America' and 'Santander', to regional and community banks, credit unions, and new market entrants. The company differentiates itself through its unified platform approach, offering best-in-class intelligent solutions that replace multiple legacy systems and connect operations across various business lines. The platform is built on 'Salesforce' and 'AWS', leveraging their infrastructure and scalability.

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NCNO's technical outlook is decidedly bearish. The stock price has experienced a significant downtrend over the past 90 days, culminating in a recent close at $25.41. This price is well below the 50-day SMA of $27.91 and the EMA_21 of $26.29, signaling continued weakness. Momentum indicators reinforce this bearish sentiment; the RSI_14 is at 52.17 but trending down, and the MACD at -0.19 is below its signal line, although the MACDh is showing a slight positive divergence, indicating potential slowing in downward momentum, this signal is weak. The ADX_14 is at 24.36 indicating a weak trend. The STOCHk_14_3_3 shows an overbought condition at 84.87. The recent price action confirms the downtrend, with a failure to sustain any significant rallies. Given these factors, NCNO appears poised for further declines in the coming 1-3 months.

nCino's MD&A presents a mixed picture. Total revenues increased by 12.4% to $148.8 million for the three months ended July 31, 2025, compared to $132.4 million in the prior year, with subscription revenues up 14.8% to $130.8 million. However, professional services and other revenues decreased slightly. The gross profit margin remained relatively stable at 59.2%. The company reported a net loss attributable to nCino, Inc. of $15.3 million for the three months ended July 31, 2025, compared to a net loss of $11.0 million for the same period in 2024. For the six-month period, net cash provided by operating activities was $72.1 million, compared to $59.4 million in the prior year. The company is actively managing its capital structure, having repurchased 2.6 million shares for $60.5 million under a $100 million stock repurchase program, funded primarily through borrowings under its credit facility. The company notes that it is operating in a 'fluctuating interest rate environment' and that 'macroeconomic environment' may have on the business. The company anticipates sales and marketing expenses will increase as a percentage of revenues as they expand into credit unions and Europe. Overall, the company is growing revenues, but profitability remains a challenge and is investing in growth, including acquisitions and AI, while also implementing restructuring efforts to improve operational efficiencies.

The nCino Q2 fiscal year 2026 earnings call struck a moderately bullish tone, with the company outperforming guidance for both revenue and profitability. CEO Sean Desmond highlighted that nCino 'outperformed our guidance ranges for both our revenues and profitability metrics,' driven by strong activity in the North American enterprise market and positive traction with growth initiatives. CFO Greg Orenstein noted total revenues were up 12% year-over-year, with subscription revenues up 15%. The company is also seeing success with its AI strategy, with Banking Adviser now adopted by over 80 customers. Management increased full-year subscription revenues guidance by $2.7 million and raised the outlook for US mortgage subscription revenues growth to 5% for fiscal 2026, up from prior guidance of flat year over year. They reiterated confidence in achieving the 'rule of 40' around fiscal year 2027. While there's a 3% headwind in subscription revenues comparisons in the second half due to one-time revenues in 2025, the overall outlook appears positive, driven by execution and a supportive macro environment.

NCNO's financial performance presents a somewhat bearish picture. While revenue has seen a slight increase from $123.7M in Q4 2024 to $148.8M in Q2 2025, the company's profitability and cash flow generation raise concerns. The gross profit ratio has fluctuated, ending at 0.592 in the latest quarter, indicating inconsistent margin management. Operating cash flow, while positive at $17.7M in Q2 2025, has been highly variable, with a significant outflow of -$10M in Q4 2024. Furthermore, the company's total debt has significantly increased from $74.2M in Q4 2024 to $269.5M in Q2 2025, suggesting a substantial increase in leverage and potential financial risk. The net income has also been volatile, swinging from a profit of $1.16M to a loss of -$15.26M. These factors, particularly the rising debt and inconsistent profitability, suggest caution regarding NCNO's short-term financial stability.

The company presents a moderately bullish investment profile based on its key metrics and financial ratios. Revenue has shown positive growth, indicating a healthy demand for its products or services. The gross margin has remained relatively stable, suggesting efficient cost management. The Return on Equity (ROE) indicates a solid return for shareholders. The Price-to-Earnings (P/E) ratio suggests the company is appropriately valued by the market. The debt-to-equity ratio has seen a decrease, showcasing the company's improved financial leverage. The current ratio signifies the company's strong ability to meet its short-term obligations. Overall, the company demonstrates a stable and growing business model with a healthy balance sheet, making it a moderately attractive investment for the next 6-12 months.