nCino shares slumped in after hours trading Tuesday (April 1) in the wake of guidance that anticipates slowing growth in the core cloud banking segments and mortgage markets, though a reacceleration is envisioned for fiscal year 2027.
Investor materials detailed that looking ahead, in the current fiscal year (2026) first quarter, top-line growth should be in the high single-digits year over year, to a range of roughly $139 million to $140.7 million, which would be a slowdown from the 14% growth rate notched in the most recent quarter. Fiscal year guidance also disappointed investors, who sent the shares down by 28%.
The company also announced the appointment of Sean Desmond as CEO, succeeding Pierre Naudé, who becomes executive chairman.
Opportunity and Headwinds
Desmond said on the conference call with analysts that at a high level, “there is no doubt that financial institutions across the globe continue to struggle with inefficiencies caused by legacy infrastructure. Too many of them still rely on fragmented tech stacks and siloed data, making critical processes far too slow and cumbersome” and noted that “while our scale has increased, I don’t believe our execution has kept pace with the full extent of the market opportunity … Our ability to execute over the past couple of years was significantly impacted by macroeconomic headwinds beyond our control.”
Customers had paused onboarding decisions; growth also was impacted as “we were also too optimistic in expecting a drop in interest rates to drive an increase in mortgage activity.”
As a result, booking momentum was impacted in fiscal 2025 and remained “chief contributors to our fiscal 2026 revenue outlook, which is below our expectations,” Desmond said. nCino has restructured its international teams, management said during the call.
“Operating with a keen sense of urgency and purpose, we are well positioned to reaccelerate new bookings growth — although we expect it will take a few quarters for consistent momentum to build,” Desmond said. There’s particular potential in artificial intelligence (AI)-driven documentation and onboarding processes, he said, which helps banking clients speed lending approvals.
“While there is currently volatility in the financial markets, the macro headwinds that specifically challenged us and our customer base over the past couple of years have eased quite a bit. Our customers by and large have healthy balance sheets and are forecasting growth in their loan portfolio and deposit positions,” Desmond said.
nCino CFO Greg Orenstein said on the call that subscription revenues were up 16% in the fourth quarter; subscription growth should accelerate after the current fiscal year. Though the mortgage business grew in the most recent period by 8%, forward guidance assumes no year over year increase in U.S. mortgage subscription revenues.
“In light of the specific headwinds I highlighted earlier, we expect subscription revenue growth to be approximately six points lower in the second half of the year versus the first half before reaccelerating in fiscal 2027,” the CFO said.
Potential in Deregulation
Asked later on the call about the impact of banking deregulation, particularly for smaller financial institutions, Desmond said that “overall, the community bank market for us remains one of our major portfolios. We have a significant percentage of our customer base specifically doing commercial lending in that community bank space. And this past year, we had over 50% of our overall bookings outside of the commercial space in community banking.”
