nCino(NCNO) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenues for Q1 fiscal 2025 were $128.1 million, an increase of 13% year-over-year [45] - Subscription revenues for Q1 were$ 110.4 million, also up 13% year-over-year, representing 86% of total revenues [45] - Non-GAAP net income attributable to the company for Q1 was $22 million, or$ 0.19 per diluted share, compared to $8 million or$ 0.07 per diluted share in Q1 fiscal 2024 [26] - Non-GAAP gross profit for Q1 was $84.4 million, an increase of 14% year-over-year, with a gross margin of 66% [46] - Remaining performance obligation (RPO) increased to$ 1.07 billion, up 17% from $914 million year-over-year [48] Business Line Data and Key Metrics Changes - Professional services revenues were$ 17.7 million in Q1, growing 8% year-over-year [46] - Non-U.S. revenues were $25.8 million, accounting for 20% of total revenues, and increased by 34% year-over-year [46] - The U.S. Mortgage business added 15 new logos and exceeded internal quarterly gross sales targets [15] Market Data and Key Metrics Changes - The company noted that 72% of executives surveyed reported an increase in IT budgets from the previous year, with 44% citing an increase of over 5% [36] - The liquidity crisis from the previous year has led to lasting lessons for customers, emphasizing the need for operational efficiency [16] Company Strategy and Development Direction - The company plans to reinvest some of the Q1 bottom line overperformance in sales and marketing to drive greater adoption of newer solutions [3] - The acquisition of DocFox is aimed at enhancing onboarding and account opening capabilities for small business and commercial banking [19] - The company is focused on leveraging technology to improve profitability and customer experience in the mortgage market [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving revenue growth targets, citing stabilization of interest rates as a key factor for improved customer conversations [14] - The company anticipates continued subscription revenue growth of 13% to 15% for the full fiscal year [28] - Management highlighted the importance of operational efficiency and quality digital experiences for clients [38] Other Important Information - The company expects total revenues for fiscal year 2025 to be between$ 538.5 million and $544.5 million [28] - Non-GAAP operating income for fiscal year 2025 is now expected to be between$ 86 million and $89 million [29] Q&A Session Questions and Answers Question: What are some key things learned from customer conversations at nSight? - Customers are seeking solutions that drive efficiency and help them operate better, emphasizing the need for purposeful and focused solutions [52] Question: What is the outlook for the mortgage business? - The mortgage business is still growing almost double digits, with 15 new logos added, but it is dilutive to overall growth due to slower growth compared to other segments [64] Question: How does the company view the impact of AI on the industry? - There is excitement around AI, but customers need guidance on compliance and how to effectively use AI tools [58] Question: What is the company's strategy regarding hiring and operational expenses? - The company plans to increase operational expenses due to merit increases and new hires from acquisitions, but expects stability in the hiring process moving forward [61] Question: How does the company view the international market? - The company is seeing increasing demand in regions like Spain and the Nordics, with a focus on expanding its presence internationally [105]