0001902733-25-000131
SEC filingnCino's subscription revenue grew 11.3% YoY in Q3 FY26, driving improved margins and positive net income.
In Q3 FY26 (three months ended October 31, 2025), nCino reported total revenues of $152.2 million, up 9.6% YoY, driven by subscription revenue growth of 11.3% to $133.4 million. Subscription gross margin improved slightly to 71.9% from 71.8%, while professional services gross margin deteriorated to (12.3)% from (5.7)%, reflecting strategic investments in delivery capacity and lower effective billing rates. Operating income swung to a positive $11.7 million from a loss of $0.8 million, benefiting from lower research and development (-$3.5M) and general and administrative (-$3.8M) expenses, partially offset by higher sales and marketing (+$3.4M). Net income attributable to nCino was $6.5 million, compared to a net loss of $5.3 million in the prior year. Non-GAAP operating income rose to $39.9 million from $28.0 million, excluding items such as stock-based compensation, amortization of intangibles, acquisition costs, and restructuring charges.
Subscription revenues remain the primary growth engine, representing 87.7% of total revenues (up from 86.4%). The increase was split 48% from existing customer expansion and 52% from new customers. Professional services revenues declined slightly as a percentage of total and generated negative gross margins, reflecting higher personnel costs and investments in AI technology. International revenues accounted for 22.1% of total revenues, with acquisitions (FullCircl and Sandbox Banking) contributing $5.2 million in subscription revenues during the quarter. nCino continues to transition to asset-based pricing, which is expected to align revenues with customer value.
The MD&A does not provide explicit quantitative guidance for future periods. However, management expects subscription revenues to continue growing as a percentage of total, supported by the shift to asset-based pricing and international expansion. The company anticipates that research and development expenses will decline as a percentage of revenues, leveraging existing technology investments. Sales and marketing spend is expected to increase as the company expands into credit unions and continental Europe. The restructuring plan initiated in May 2025 is expected to improve operational efficiencies, with $10.1 million in charges incurred year-to-date. Cash and cash equivalents stood at $87.6 million with $203.5 million drawn on the credit facility; management believes current liquidity is sufficient for at least 12 months. The stock repurchase program of $100 million was fully utilized by October 31, 2025.
As of October 31, 2025, nCino held $87.6 million in cash and cash equivalents, down from $120.9 million at January 31, 2025. Total debt stood at $255.1 million, consisting of $203.5 million drawn on the revolving credit facility and $51.6 million in financing obligations. Shareholders' equity was $1,041.5 million. The company maintains a $250 million revolving credit facility (2024 Credit Agreement) with $46.5 million available as of October 31, 2025, and a leverage covenant of 4.00x.
Total purchase commitments amounted to $185.3 million, primarily for licenses and hosting services. Of these, $22.1 million are due within the next three months, $162.3 million within 1-3 years, and $0.9 million thereafter. Financing obligations for the headquarters facility totaled $51.6 million, with $5.1 million due within 24 months and the remainder later. Operating lease liabilities were $14.3 million, with $4.1 million current.
During the nine months ended October 31, 2025, nCino completed its $100 million stock repurchase program, buying back 3.996 million shares at an average price of $25.02. No dividends were declared. The company increased its revolving credit facility borrowings by a net of $37.5 million (proceeds $102.5 million, repayments $65.0 million). Capital expenditures were $7.0 million, representing 1.6% of total revenues.
nCino operates as a single reportable segment. Geographic revenue breakdown (based on contracting entity) for the nine months ended October 31, 2025: United States $346.5 million (78%), United Kingdom $55.1 million (12%), and other $43.5 million (10%). Long-lived assets were concentrated in the U.S. ($71.2 million) and U.K. ($16.2 million).
nCino's operating cash flow (CFO) of $77.1 million significantly exceeded net income of $0.9 million, reflecting strong cash generation from non-cash items and working capital management. Key non-cash add-backs included $52.7 million in stock-based compensation and $32.0 million in depreciation and amortization. A $63.1 million decrease in accounts receivable provided a substantial cash inflow, partially offset by a $46.1 million decline in deferred revenue. Capex of $7.0 million was modest, representing only 9% of CFO, indicating low capital intensity. Investing activities also included $50.3 million for business acquisitions. Financing activities featured $100.1 million in share repurchases, funded partly by $102.5 million in borrowings under the revolving credit facility. Overall, cash flow quality is robust, with operating cash flows comfortably covering capex and supporting significant capital returns.