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What changed in nCino, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of nCino, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+346 added−333 removedSource: 10-K (2024-03-26) vs 10-K (2023-03-28)

Top changes in nCino, Inc.'s 2024 10-K

346 paragraphs added · 333 removed · 269 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

76 edited+9 added−18 removed33 unchanged
Biggest changeOur diverse customer base ranges from global FIs, such as Bank of America, Barclays, Santander Bank and TD Bank; to enterprise banks, such as KeyBank, Allied Irish Banks, First Horizon Bank and Truist Bank; to regional and community banks, such as Huntingdon Valley Bank, Arvest Bank and ConnectOne Bank; to credit unions, such as Navy Federal Credit Union, SAFE Credit Union, Golden1 Credit Union and Wright-Patt Credit Union; to new market entrants, such as OakNorth Bank, Recognise Bank and Judo Bank; to independent mortgage banks such as Synergy One Lending and Fairway Independent Mortgage Corporation.
Biggest changeBank; to regional and community banks, like WaFd Bank, M&F Bank, and ConnectOne Bank; to credit unions, such as Navy Federal Credit Union, SAFE Credit Union, Marine Credit Union, and Conexus Credit Union; to new market entrants, such as challenger banks like Recognise Bank and Judo Bank; to independent mortgage banks like Synergy One Lending and Fairway Independent Mortgage Corporation.
By connecting previously disjointed functions and breaking down internal silos, nCino increases transparency at all organizational levels across lines of business, enabling FIs to measure their operations and maximize performance, productivity and profitability. • Elevate Employee Experience and Performance .
By connecting previously disjointed functions and breaking down internal silos, nCino increases transparency at all organizational levels across all lines of business, enabling FIs to measure their operations and maximize performance, productivity and profitability. • Elevate Employee Experience and Performance .
The nCino Bank Operating System also delivers data analytics and AI/ML capabilities through our nCino IQ ("nIQ") application suite to provide our customers with automation and insights into their operations, such as tools for analyzing, measuring and managing credit risk, as well as to improve their ability to comply with regulatory requirements.
The nCino Bank Operating System also delivers data analytics and AI/ML capabilities through nIQ application suite to provide our customers with automation and insights into their operations, such as tools for analyzing, measuring and managing credit risk, as well as to improve their ability to comply with regulatory requirements.
Total Reward, Well-being & Experience nCino believes that productivity is driven by employees who are actively engaged, both by their connection to our purpose and their certainty that the company cares about their well-being. We therefore invest in their financial, social and physical wellness as well as the communities in which they work.
Total Reward, Well-being & Employee Experience nCino believes that productivity is driven by employees who are actively engaged, both by their connection to our purpose and their certainty that the company cares about their well-being. We therefore invest in their financial, social and physical wellness, as well as the communities in which they work.
As a native cloud platform that utilizes a single code base regardless of the size and complexity of the FI, the nCino Bank Operating System is highly scalable and configurable for the specific needs of each customer.
As a native cloud platform that utilizes a single code base regardless of the size and complexity of the FI, the nCino Bank Operating System is highly scalable and configurable for the specific needs of each FI.
The nCino Bank Operating System’s deposit account opening solution optimizes the process for opening checking, savings, debit/ATM cards, money market, certificates of deposit and retirement accounts. FIs can utilize nCino’s intuitive, scalable and flexible workflow to efficiently open consumer, commercial or small business accounts while maintaining individual account processes and requirements.
The nCino Bank Operating System’s deposit account opening application optimizes the process for opening checking, savings, debit/ATM cards, money market, certificates of deposit and retirement accounts. FIs can utilize nCino’s intuitive, scalable and flexible workflow to efficiently open consumer, commercial or small business accounts while maintaining individual account processes and requirements.
Additionally, in January 2022, we completed our acquisition of SimpleNexus which expanded our capabilities to the U.S. mortgage market. Our Relationship with Salesforce From our inception, we built the nCino Bank Operating System on the Salesforce Platform to leverage its global infrastructure, reliability, and scalability.
Additionally, in January 2022, we completed our acquisition of SimpleNexus, which expanded our capabilities to the U.S. point-of-sale mortgage market. Our Relationship with Salesforce From our inception, we built the nCino Bank Operating System on the Salesforce Platform to leverage its global infrastructure, reliability, and scalability.
In addition, we work with some of the world’s leading technology and SI partners to help implement our solutions, which has increased our capacity to deliver and deploy the nCino Bank Operating System and enabled us to scale more quickly.
In addition, we work with some of the world’s leading technology and SI partners to help implement our solution, which has increased our capacity to deliver and deploy the nCino Bank Operating System and enabled us to scale more quickly.
How the nCino Bank Operating System Works The nCino Bank Operating System connects FI employees, their clients and third parties on a single, cloud-based platform, eliminating silos and bringing new levels of coordination and transparency to the FI.
How the nCino Bank Operating System Works The nCino Bank Operating System connects FIs' employees, their clients and third parties on a single, cloud-based platform, eliminating silos and bringing new levels of coordination and transparency to an FI.
Once implemented, our solution becomes deeply embedded in our customers’ business processes, enabling workflow across the FI and allowing our customers to serve their clients anytime, anywhere, from any internet-enabled device.
Once implemented, our solution becomes deeply embedded in our customers’ business processes, enabling mission critical workflow across the FI and allowing our customers to serve their clients anytime, anywhere, from any internet-enabled device.
Currently deployed in 16 countries, we have made significant investments to expand our presence in EMEA and APAC, and the nCino Bank Operating System can currently support over 120 languages and over 140 currencies.
Currently deployed in 19 countries, we have made significant investments to expand our presence in EMEA and APAC, and the nCino Bank Operating System can currently support over 120 languages and over 140 currencies.
We believe our success in growing our business will depend on our ability to demonstrate to FIs that our solutions provide superior business outcomes to those of third-party vendors or internally developed systems.
We believe our success in growing our business will depend on our ability to demonstrate to FIs that our solutions provide superior business outcomes and value to those of third-party vendors or internally developed systems.
Benefits and Features of the nCino Bank Operating System The nCino Bank Operating System leverages common data sets and functionality across solutions, which optimizes and accelerates its deployment throughout a FI. These include: • Client Onboarding.
Benefits and Features of the nCino Bank Operating System The nCino Bank Operating System leverages common data sets and functionality across applications, which optimizes and accelerates its deployment throughout a FI. These include: • Client Onboarding.
The nCino Bank Operating System helps FIs reduce regulatory, credit and operational risk through automated workflow, data reporting, standardized risk rating calculations and financial modeling. For example, the content management, automated workflow and digital audit trail and snapshot functionality within the nCino Bank Operating System helps our customers more effectively and efficiently prepare for regulatory examinations.
The nCino Bank Operating System can help FIs reduce regulatory, credit and operational risk through workflow and automation, data reporting, standardized risk rating calculations and financial modeling. For example, the content management, automated workflow and digital audit trail and snapshot functionality within the nCino Bank Operating System helps our customers more effectively and efficiently prepare for regulatory examinations.
By harnessing the power of diverse partners and leveraging open APIs and productized integrations, the nCino Bank Operating System creates a connected and scalable ecosystem that brings together disparate data sources and systems, acting as a data hub that integrates with core systems, credit reporting agencies and other third-party applications to centralize FI’s data, creating an actionable single data platform and warehouse.
By harnessing the power of diverse partners and leveraging open application programming interfaces and productized integrations, the nCino Bank Operating System creates a connected and scalable ecosystem that brings together disparate data sources and systems, acting as a data hub that integrates with core systems, credit reporting agencies and other third-party applications to centralize an FI’s data, creating an actionable single data platform and warehouse.
Research and Development Our research and development organization is responsible for the design, development, and testing of our solutions. We utilize Agile software development methodologies and industry best practices, such as continuous integration/continuous deployment, automated testing and distributed version control, to develop new functionality and enhance our existing solutions.
Research and Development Our research and development organization is responsible for the design, development, and testing of our solutions. We utilize industry best practices, such as continuous integration/continuous deployment, automated testing and distributed version control, to develop new functionality and enhance our existing solutions.
Built into the nCino Bank Operating System is client onboarding functionality that supports the front, middle and back office onboarding process, allowing FIs to effectively evaluate the risk of doing business with a client, while also providing clients an efficient and personalized user experience.
Built into the nCino Bank Operating System is client onboarding functionality that supports and automates the front, middle and back office onboarding process, allowing FIs to effectively evaluate the risk of doing business with a client, while also providing clients an efficient and personalized 2 Table of Contents user experience.
These companies represent a cross-section of FIs across asset classes and geographies and each of these customers represent a substantial level of Annual Contract Value ("ACV") in its respective category. As of January 31, 2023, we had over 420 FIs that have contracted for the nCino Bank Operating System for client onboarding, loan origination and/or deposit account opening.
These companies represent a cross-section of FIs across asset classes and geographies and each of these customers represent a substantial level of Annual Contract Value ("ACV") in its respective category. As of January 31, 2024, we had 460 FIs that have contracted for the nCino Bank Operating System for client onboarding, loan origination and/or deposit account opening.
To date, over 2,500 trained SI consultants have completed our training program to implement the nCino Bank Operating System. Through the open architecture of the nCino Bank Operating System, an increasing number of third-party technology partners, including Rich Data Co., Alloy, Codat, Plaid, DocuSign, Mambu and OneSpan, among others, are integrated with our solution. • Selectively Pursue Strategic Transactions.
To date, over 3,500 SI consultants have completed our training program to implement the nCino Bank Operating System. Through the open architecture of the nCino Bank Operating System, an increasing number of third-party technology partners, including Rich Data Co, Alloy, Codat, Plaid, and DocuSign, among others, are integrated with our solution. • Selectively Pursue Strategic Transactions.
The nCino Bank Operating System’s automation, workflow and digitization capabilities help eliminate manual processes and redundant efforts, freeing FIs' employees to focus on their clients’ experiences rather than their transactions.
The nCino Bank Operating System’s automation, workflow and digitization capabilities help eliminate manual processes and redundant efforts, freeing an FI's employees to focus on their clients’ experiences rather than their transactions.
These teams are responsible for outbound lead generation, driving new business, and helping to manage account relationships and renewals, further driving adoption of our solutions within and across lines of business. These teams maintain close relationships with existing customers and act as an advisor to FIs to help identify and understand their unique needs, challenges, goals, and opportunities.
These teams are responsible for demand and lead generation, driving new business, and helping to manage account relationships and renewals, further driving adoption of our solutions within and across lines of business. These teams maintain close relationships with existing customers and act as an advisor to each FI to help identify and understand their unique needs, challenges, goals, and opportunities.
We believe we cannot realize our full strength unless we work collectively to acknowledge, respect, empathize with and appreciate each other's differences. To ensure that nCino remains rooted in our commitment to build a 7 Table of Contents diverse, equitable and inclusive workforce, our talent acquisition strategy includes relationships with diverse professional organizations and minority colleges and universities.
We believe we can't realize our full strength unless we work collectively to acknowledge, respect, empathize with and appreciate each other's differences. To ensure that nCino remains rooted in our commitment to build a diverse, equitable and inclusive workforce, our talent acquisition strategy includes relationships with diverse professional organizations and minority colleges and universities.
Throughout this market expansion, we broadened the nCino Bank Operating System by adding functionality for consumer lending, client onboarding, deposit account opening, analytics and AI/ML.
Throughout this market expansion, we broadened the nCino Bank Operating System by adding functionality for consumer lending, client onboarding, deposit account opening, analytics and artificial intelligence and machine learning ("AI/ML").
For enterprise FIs, we generally work with SIs such as 5 Table of Contents Accenture, Deloitte, and PwC. For regional FIs, we work with SIs such as West Monroe Partners, and for community banks we work with SIs or perform configuration and implementation ourselves.
For enterprise FIs, we generally work with SIs such as Accenture, Deloitte, and PwC. For regional FIs, we work with SIs such as West Monroe Partners, and for community banks, we work with SIs or perform configuration and implementation ourselves.
Our revenues from existing customers continue to grow as additional users are added, creating strong customer cohort dynamics. • Expand our Customer Base. We believe the global market for cloud banking is large and underserved.
Our revenues from existing customers continue to grow as additional users are added, creating strong customer cohort dynamics. • Expand Our Customer Base. We believe the global market for a single platform is large and underserved.
The nCino Customer Success Management team is the customer’s central touch point, whose primary job is to manage the long-term health and success of each customer. A significant majority of our FI customers, whose employees utilize our client onboarding, loan origination, and/or deposit account opening applications, participate in our online nCino User Community.
The nCino Customer Success 5 Table of Contents Management team is the customer’s central touch point, whose primary job is to manage the long-term health and success of each customer. A significant majority of our FI customers, whose employees utilize our client onboarding, loan origination, and/or deposit account opening applications, have joined our online nCino User Community.
In addition, we have over 1,000 FIs that have contracted for our Portfolio Analytics solutions, which we acquired with the nCino Portfolio Analytics, LLC (formerly, Visible Equity, LLC, "Visible Equity") acquisition in fiscal 2020, and over 470 customers that have contracted with SimpleNexus.
In addition, we have over 1,000 FIs that have contracted for our Portfolio Analytics solutions, which we acquired with the nCino Portfolio Analytics, LLC (formerly, Visible Equity, LLC, "Visible Equity") acquisition in fiscal 2020, and over 430 customers that have contracted for nCino Mortgage Suite.
We believe our ability to provide client onboarding, loan origination, deposit account opening, analytics and AI/ML on a single platform across all lines of business, our deep banking domain expertise, our mobile-first homeownership platform, our reputation for high-quality professional services and customer support, and our strong company culture, distinguish us from our competition.
We believe our ability to provide client onboarding, loan origination, deposit account opening, analytics, portfolio management, and AI/ML on a single platform across lines of business, our deep banking domain expertise, our mortgage suite, our reputation for high-quality professional services and customer support, and our strong company culture, distinguish us from our competition.
We promote sales in North America out of our offices in the U.S. and Canada, in APAC out of our offices in Australia and Japan, and in EMEA primarily out of our office in the UK. • Continue Strengthening and Extending our Product Functionality.
We promote sales in North America out of our offices in the U.S. and Canada, in APAC out of our offices in Australia, New Zealand, and Japan, and in EMEA out of our offices in the UK and Spain. • Continue Strengthening and Extending Our Product Functionality.
Customer Success Once a customer contracts for one of our solutions, we provide configuration and implementation services to assist the customer in the deployment, either directly or through our SI partners. Configuration and implementation engagements typically range in duration from three to 18 months, depending on scope.
Customer Success Once a customer contracts for the nCino Bank Operating System, we provide configuration and implementation services to assist the customer in the deployment, either directly or through our SI partners. Configuration and implementation engagements typically range in duration from three months to 18 months, depending on the scope.
We have developed strong relationships with a number of leading SIs, including Accenture, Deloitte, PwC, and West Monroe Partners, that increase our capacity to onboard new customers and implement the nCino Bank Operating System, extend our global reach and drive increased market awareness of our company and solutions.
We have developed strong relationships with several leading SIs, including Accenture, Deloitte, PwC, and West Monroe Partners, that increase our capacity to onboard new customers and implement the nCino Bank Operating System, extend our global reach and drive 4 Table of Contents increased market awareness.
With enhanced onboarding reporting tools, FIs can generate customized reports and use real-time analytics and data from government watchlists and other third-party systems to achieve a holistic client view, enabling our customers to offer their clients more value-added services and custom-tailored offerings. 2 Table of Contents • Loan Origination.
With enhanced onboarding reporting tools, FIs can generate customized reports and use real-time analytics and data from government watchlists and other third-party systems to achieve a holistic client view, enabling our customers to offer their clients more value-added services and custom-tailored offerings. • Deposit Account Opening.
We provide opportunities for innovation through hackathons and new technology pilots, and we encourage customers to participate in our Product Design Programs to provide us with input on our product development roadmap. Our research and development spend was $121.6 million or 29.8% of total revenues in fiscal 2023.
We provide opportunities for innovation through hackathons and new technology pilots, and we encourage customers to participate in our Product Design Programs to provide us with input on our product development roadmap. Our research and development spend was $117.3 million or 24.6% of total revenues in fiscal 2024.
In this regard, we are likely to be assessed on a number of factors, including: • breadth and depth of functionality; • ease of deployment, implementation and use; • total cost of ownership and return on investment; • level of customer satisfaction; • brand awareness and reputation; • cloud-based technology platform and pricing model; • quality of implementation and customer support services; • capability for configurability, integration, and scalability; • domain expertise in banking technology; • security and reliability; • ability of our solutions to support compliance with legal and regulatory requirements; 6 Table of Contents • ability to innovate and respond to customer needs quickly; • ability to integrate with third-party applications and systems; and • insights and benchmarking derived from the cross-institution data and transactions that flow through our platform.
In this regard, we are likely to be assessed on a number of factors, including: • breadth and depth of functionality; • ease of deployment, implementation and use; • total cost of ownership and return on investment; • level of customer satisfaction; • brand awareness and reputation; • cloud-based technology platform and pricing model; • quality of implementation and customer support services; • capability for configurability, integration, and scalability; • domain expertise in banking technology; • security and reliability; • ability of our solutions to support compliance with legal and regulatory requirements; • ability to innovate and respond to customer needs quickly; • ability to integrate with third-party applications and systems; and • insights and benchmarking derived from the cross-institution data and transactions that flow through our platform. 6 Table of Contents We believe we compete favorably with respect to these factors, but we expect competition to increase as existing competitors evolve their offerings and as new companies enter the market.
In total, we had over 1,850 customers as of January 31, 2023, of which 465 each generated more than $100,000 in subscription revenues in fiscal 2023. No single customer represented more than 10% of total revenues in fiscal 2023.
In total, we had over 1,800 customers as of January 31, 2024, of which 501 each generated more than $100,000 in subscription revenues in fiscal 2024. No single customer represented more than 10% of total revenues in fiscal 2024.
Fundamental elements of the nCino Bank Operating System are built on Salesforce (the "Salesforce Platform"), which allows us to focus our product development efforts on building deep vertical functionality specifically for FIs, while leveraging Salesforce's global infrastructure, reliability and scalability. We also have certain solutions that leverage the Amazon Web Services ("AWS") platform.
Fundamental elements of the nCino platform are built on Salesforce (the "Salesforce Platform"), which allows the Company to focus product development efforts on building deep vertical functionality specifically for FIs, while leveraging Salesforce's global infrastructure, reliability, and scalability. nCino also has solutions that leverage the Amazon Web Services ("AWS") platform.
In addition, our intelligent enterprise content management system includes a standardized filing system across applications, providing instant and ongoing access to digital documentation and checklists to help enable customers to meet their compliance and credit requirements.
In addition, our intelligent enterprise content management system includes a standardized filing system across applications, providing instant and ongoing access to digital documentation and checklists to help ensure that compliance and credit requirements are met.
We initially focused the nCino Bank Operating System on transforming commercial and small business lending for community and regional banks in the United States ("U.S."). We introduced this solution to enterprise banks in the U.S. in 2014, and then internationally in 2017, and have subsequently expanded across North America, Europe and Asia-Pacific ("APAC").
The nCino Bank Operating System was initially designed to help transform commercial and small business lending for community and regional banks. This solution was introduced to enterprise banks in the United States ("U.S.") in 2014, and then internationally in 2017, and has subsequently expanded across North America, Europe, the Middle East, and Asia-Pacific ("APAC").
The Salesforce Agreement automatically renews for additional one-year periods thereafter unless notice of termination is provided. Sales and Marketing Our sales team includes business development representatives, account executives, field sales engineers, and customer success managers.
Our agreement with Salesforce automatically renews for additional one-year periods thereafter unless notice of termination is provided. Global Revenue Organization Our Global Revenue Organization includes business development representatives, account executives, field sales engineers, and marketing.
By embedding insights and automation into the loan lifecycle, nCino empowers FIs to accelerate revenue growth, improve operational efficiency and win the trust of their customers. • Homeownership Platform.
By embedding insights and automation into the loan lifecycle, nCino empowers FIs to accelerate revenue growth, improve operational efficiency and win the trust of their customers. 3 Table of Contents • A Powerful Ecosystem.
Each ERG includes executive sponsorship and a connection to the Diversity, Equity and Inclusion Council. nCino has a full-time Diversity, Equity, Inclusion and Community Involvement leader who champions these initiatives and programs, with support and oversight from nCino’s CEO and People Operations leadership.
Each ERG includes executive sponsorship and a connection to the Diversity, Equity and Inclusion Council. 7 Table of Contents In 2021, nCino hired a full-time Diversity, Equity, Inclusion and Community Involvement leader to champion these initiatives and programs, with support and oversight from nCino’s CEO and People Operations leadership.
Employees impacted by this event are included in our headcount as of January 31, 2023. Diversity, Equity, Inclusion, and Community As a global company whose employees represent a wide variety of identities across race, ethnicity, gender, sexual orientation, ability and disability, class, immigration status and more, we know diverse identities, experiences and perspectives make for stronger teams.
Diversity, Equity, Inclusion, and Community As a global company whose employees represent a wide variety of identities across race, ethnicity, gender, sexual orientation, ability and disability, class, immigration status and so much more; we know diverse identities, experiences and perspectives make for stronger teams.
We rely on federal, state, common law, and international rights, as well as contractual provisions, to protect our intellectual property. We control access to our proprietary technology by entering into confidentiality and invention assignment agreements with our employees and contractors, and confidentiality agreements with third parties.
We rely on federal, state, common law, and international rights, as well as contractual restrictions, to protect our intellectual property. We control access to our proprietary technology by entering into confidentiality and invention assignment agreements with our employees and contractors, and confidentiality agreements with third parties. We seek patent protection for certain key innovations, protocols, processes, and other inventions.
Our technology and product efforts are focused on improving and enhancing the features, functionality, performance, availability, and security of our existing service offerings, as well as developing new features, functionality, and services.
Our technology and product efforts are focused on improving and enhancing the features, functionality, performance, availability, and security of our existing service offerings, as well as developing new features, functionality, and services. We also remain focused on integrating businesses, services and technologies from acquisitions and with partners.
In order to ensure compliance with these laws, financial service providers may be required to implement operating policies and procedures to protect the privacy and security of their, the financial service providers', and their end users' information, and to undergo periodic audits and examinations.
In order to ensure compliance with these laws, financial service providers may be required to implement operating policies and procedures to protect the privacy and security of their, the financial service providers', and their end users' information, and to undergo periodic audits and examinations. 8 Table of Contents Security Is Paramount for Global Financial Service Providers The risks of cybercrime and fraud have always existed in banking and financial services.
For these reasons, we have built our company with a cultural foundation based on six core values: Bring Your A-Game, Do the Right Thing, Respect Each Other, Make Someone’s Day, Have Fun and Be a Winner.
Culture is a key differentiator; our position as the worldwide leader in cloud banking depends on the people who work at nCino. For these reasons, we have built our company with a cultural foundation based on six core values: Bring Your A-Game, Do the Right Thing, Respect Each Other, Make Someone’s Day, Have Fun and Be a Winner.
Our marketing teams oversee all aspects of nCino's global brand including brand strategy, public relations, integrated marketing, product marketing, marketing communications and marketing operations. Our marketing efforts span the full funnel from brand awareness building and pipeline generation to adoption and cross-sell .
In addition, our marketing team oversees all aspects of the nCino global brand including brand strategy, public relations and external communications, integrated marketing, product marketing, market strategy, marketing operations, and regional marketing. Our marketing efforts span the full buyer journey from brand awareness and pipeline generation to adoption and cross-sell .
As of January 31, 2023, we had 1,791 employees, of which approximately 85% were in the U.S. and 15% were in other locations around the globe. We believe our employee engagement and experience remain strong. In January 2023, the company announced a workforce reduction of approximately seven percent (7%).
As of January 31, 2024, we had 1,653 employees, of which approximately 84% were in the U.S. and 16% were in other locations around the globe. We believe our employee engagement and experience remain strong.
The second was a partnership with the Food Bank of Central & Eastern North Carol ina to support the development of the nCino Hunger Solutions Center, a new facility in Wilmington that will help the organization expand its food relief efforts and ensure substantial growth in its nutrition services, food access and distribution throughout southeastern North Carolina.
We committed to a donation over a five-year period to support the development of the nCino Hunger Solutions Center, a new facility in Wilmington that is helping the organization expand its food relief efforts and ensure substantial growth in its nutrition services, food access and distribution throughout southeastern North Carolina.
Our solution also supports the speed and convenience required for small business and consumer loans across products, such as home equity lines of credit, home equity term loans, uncollateralized lines of credit, automobile loans and credit cards, while providing the tools needed to address regulatory compliance, including fair lending and the Home Mortgage Disclosure Act. • Deposit Account Opening.
Our solution also supports the speed and convenience required for small business and consumer loans across products, such as home equity lines of credit, home equity term loans, uncollateralized lines of credit, automobile loans and credit cards, while providing the tools needed to address regulatory compliance, including fair lending and the Home Mortgage Disclosure Act. • End-to-End Mortgage Suite. nCino’s Mortgage Suite increases an FI's mortgage profitability by automating loan processing and closing, delivering modern customer convenience, surfacing data insights, and simplifying incentive compensation management.
We also remain focused on integrating businesses, services and technologies from acquisitions and with partners. 8 Table of Contents Global Financial Service Providers Are Highly Regulated Global financial service providers and their solutions are subject to extensive and complex data, security and regulatory guidance and oversight by international, country, federal, state and other regulatory authorities.
Global Financial Service Providers Are Highly Regulated Global financial service providers and their solutions are subject to extensive and complex data, security and regulatory guidance and oversight by international, country, federal, state and other regulatory authorities.
We believe our culture is the foundation for the successful execution of our strategy and, as a result, is a critical strength of our organization.
We believe our culture is the foundation for the successful execution of our strategy and, as a result, is a critical strength of our organization. In recognition of our continued focus on employee engagement, satisfaction and culture, we have received numerous workplace awards.
This strategy has allowed us to benefit from Salesforce’s investment in the continual improvement of the Salesforce Platform. We believe we have a mutually beneficial strategic relationship with Salesforce. Salesforce Ventures, an affiliate of Salesforce, made investments in our common stock in January 2014, March 2015, July 2017, January 2018, and September 2019.
This strategy has allowed us to benefit from Salesforce’s investment in the continual improvement of the Salesforce Platform. We believe we have a mutually beneficial strategic relationship with Salesforce.
On June 19, 2020, this agreement was superseded and replaced by the Salesforce Agreement which expires on June 19, 2027 unless earlier terminated by either party in the event of the other party’s material breach, bankruptcy, change in control in favor of a direct competitor, or intellectual property infringement.
On December 20, 2023, our agreement with Salesforce was amended and its term was extended to expire on January 31, 2031 unless earlier terminated by either party in the event of the other party’s material breach, bankruptcy, change in control in favor of a direct competitor, or intellectual property infringement.
We support our customers with 24/7 access to engineers and other technical support personnel, outcome based support offerings, release management, managed services, and technical support via online chat. To help our customers achieve success, we offer in-depth change management workshops, classroom and virtual end user and administrator training, consultative functionality adoption services, and best practices.
To help our customers achieve success with the nCino Bank Operating System, we offer in-depth change management workshops, classroom and virtual end user and administrator training, consultative functionality adoption services, and best practices.
In exchange, Salesforce provides the hosting infrastructure and data center for these applications, as well as configuration, reporting, and other functionality within the Salesforce Platform. In addition, under the Salesforce Agreement, we are an authorized reseller of Salesforce’s CRM functionality to certain FIs in the U.S. Our original agreement with Salesforce was entered into in December 2011.
In addition, under our agreement with Salesforce, we are an authorized reseller of Salesforce’s CRM functionality to certain FIs in the U.S. Our original agreement with Salesforce was entered into in December 2011, which was superseded and replaced on June 19, 2020.
To transform an industry, we believe it is essential to foster a company culture that not only empowers its employees to challenge the status quo, but also emboldens them to drive change and champion customer success. Culture is a key differentiator for us; our position as the worldwide leader in cloud banking depends on the people who work at nCino.
Human Capital Management We are in the business of fundamentally changing the way FIs operate. To transform an industry, we believe it is essential to foster a company culture that not only empowers its employees to challenge the status quo, but also emboldens them to drive change and champion customer success.
As of January 31, 2023, Salesforce owned less than 5% of our common stock. Pursuant to our agreement with Salesforce (the "Salesforce Agreement"), when we sell our client onboarding, loan origination, and/or deposit account opening applications, we include a subscription to the underlying Salesforce Platform and remit a subscription fee to Salesforce.
Pursuant to our agreement with Salesforce, when we sell our client onboarding, loan origination, and/or deposit account opening applications, we include a subscription to the underlying Salesforce Platform and remit a subscription fee to Salesforce. In exchange, Salesforce provides the hosting infrastructure and data center for these applications, as well as configuration, reporting, and other functionality within the Salesforce Platform.
Although we actively attempt to utilize patents to protect our technologies, we believe that none of our patents, individually or in the aggregate, are material to our business. Human Capital Management We are in the business of fundamentally changing the way FIs operate.
We file patent applications where we believe there to be a strategic technological or business reason to do so. Although we actively attempt to utilize patents to protect our technologies, we believe that none of our patents, individually or in the aggregate, are material to our business.
Seamlessly embedded within the account opening experience, the nCino Bank Operating System provides the new client onboarding capability to collect KYC related information to meet compliance standards.
Seamlessly embedded within the account opening experience, the nCino Bank Operating System provides the new client onboarding capability to collect KYC related information to meet compliance standards. The deposit account opening application allows clients to open a deposit account digitally, across any device, in a branch or through a call center, with speed and flexibility. • Loan Origination.
After realizing that virtually all FIs were dealing with the same problems—cumbersome legacy technology, fragmented data, and disconnected business functions—we were spun out as a separate company in late 2011.
After realizing that the same problems—cumbersome legacy technology, fragmented data, disconnected business functions, and a disengaged workforce made it difficult to maintain relevancy in their clients' lives—were endemic across the financial services industry, nCino spun out as a separate company in late 2011.
We believe we compete favorably with respect to these factors but we expect competition to increase as existing competitors evolve their offerings and as new companies enter our market. Our ability to remain competitive will depend on our ongoing efforts in research and development, sales and marketing, professional services, customer support, and our business operations generally.
Our ability to remain competitive will depend on our ongoing efforts in research and development, sales and marketing, professional services, customer support, and our business operations generally.
With nCino, FIs can: • Digitally Serve Their Clients Across All Lines of Business . The nCino Bank Operating System delivers distinctive experiences across devices, channels and products, enabling a seamless digital relationship between a FI, its employees, its clients and key third parties.
The nCino Bank Operating System delivers distinctive experiences across devices, channels and products, enabling a seamless digital relationship between an FI, its employees, its clients and key third parties. Because nCino is a cloud native platform, employees can serve their customers anywhere, at any time, from any internet-enabled device, empowering them to build deeper relationships.
Additionally, we plan to continue to develop our portfolio analytics and credit modeling capabilities, as well as our AI/ML capabilities through automation, predictive analytics, digital assistant services and data source integration, and to continue 4 Table of Contents to expand the functionality of the SimpleNexus digital homeownership platform.
Additionally, we plan to continue to develop our portfolio analytics and credit modeling capabilities, as well as our AI/ML capabilities through automation, predictive analytics, digital assistant services and data source integration. These innovations will further reduce the human resources required for routine but time-consuming tasks. • Foster and Grow Our SI and Technology Ecosystem .
These laws, procedures and restrictions provide only limited protection and the legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights are uncertain and still evolving. Furthermore, effective patent, trademark, copyright, and trade secret protection may not be available in every country in which our products are available.
We pursue the registration of our trademarks, service marks, and domain names in the U.S. and in certain other locations. These laws, procedures and restrictions provide only limited protection and the legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights are uncertain and still evolving.
This heritage is the foundation of our deep banking domain expertise, which differentiates us, continues to drive our strategy and makes us uniquely qualified to help FIs cross the 1 Table of Contents modernization divide by providing a comprehensive solution that onboards clients, originates loans, and opens accounts on a single, cloud-based platform.
This heritage is the foundation of our deep banking domain expertise, which differentiates us, continues to drive our strategy, and makes us uniquely qualified to help FIs create new efficiencies by providing an end-to-end platform that spans business lines and combines capabilities for a seamless experience.
The methods by which criminals seek to commit fraud are constantly changing, requiring financial services providers and their technology providers to continually modify their security protocols and best practices. Providing services to FIs requires experience, constant vigilance, and continuous investment to stay informed and guard against these ever-changing threats.
Providing services to FIs requires experience, constant vigilance, and continuous investment to stay informed and guard against these ever-changing threats.
Because the software is highly configurable, it can be adjusted as the FI's risk requirements and the regulatory environment evolve, helping FIs adapt to regulatory changes. • Establish an Active Data, Audit and Business Intelligence Hub . Key to the nCino Bank Operating System is its “single source of truth” data model.
Because nCino is highly configurable, it can adjust as regulations and the FI's risk requirements evolve, including regulatory changes, economic headwinds, sharp pivots, and ongoing volatility. • Establish an Active Data, Audit and Business Intelligence Hub .
By utilizing a single platform across business lines, processes and channels, FIs are able to leverage the same data and information across their entire organization. This unified platform provides all the functionality necessary to complete mission-critical workflow, enabling client onboarding, loan origination, deposit account opening, analytics and compliance.
By utilizing a single platform across business lines, processes and channels, FIs are able to leverage the same data and information across their entire organization to drive efficiency, enhance decision-making, and increase connectivity.
We invested 29.8% of our revenues back into research and development in fiscal 2023 and plan to continue to invest to extend the depth and breadth of our solutions, while further enhancing its international capabilities.
We invested 24.6% of our revenues back into research and development in fiscal 2024 and will continue to invest at similar levels in fiscal 2025 to continue to extend the breadth and depth of the nCino Bank Operating System.
Our Customers As critical and attractive as our innovation platform is, it is our proven execution and delivery that makes nCino an ideal partner for innovative FIs. As the pioneer in cloud banking, we have developed trusted relationships and a reputation for successfully implementing our solutions with FIs of all sizes in multiple geographies.
Our Customers As critical and attractive as our innovation platform is, it is our proven execution and delivery that makes nCino an ideal partner to FIs. Working closely with our customers, we take a pragmatic approach to helping institutions digitally transform.
On January 7, 2022 (the "Acquisition Date"), we acquired SimpleNexus, a leading cloud-based mobile-first homeownership software company in the U.S. nCino has achieved rapid growth since our inception over eleven years ago, and we plan to continue investing in and expanding the depth and breadth of our solutions.
On January 7, 2022 (the "Acquisition Date"), nCino acquired SimpleNexus, a leading cloud-based mobile-first homeownership software company in the U.S., which expanded the suite of products to include a suite of mortgage solutions. On September 8, 2023, SimpleNexus began operating as SimpleNexus, LLC d/b/a nCino Mortgage, LLC ("nCino Mortgage") as part of our rebranding effort.
Security Is Paramount for Global Financial Service Providers The risks of cybercrime and fraud have always existed in banking and financial services. As the adoption and use of digital channels increase in financial services, the incidence of cybercrime and fraud has grown substantially.
As the adoption and use of digital channels increase in financial services, the incidence of cybercrime and fraud has grown substantially. The methods by which criminals seek to commit fraud are constantly changing, requiring financial services providers and their technology providers to continually modify their security protocols and best practices.
When we work with SIs, we generally field a small team of advisory consultants alongside the SIs to help ensure the success of the engagement. For SimpleNexus solutions, we directly provide configuration and implementation services in the deployment, which typically takes about three months.
When we work with SIs, we generally field a small team of advisory consultants alongside the SIs to help ensure the success of the engagement. We support our customers with 24/7 access to engineers and other technical support personnel, outcome-based support offerings, release management, managed services, and technical support via online chat.
Our customers leverage nCino’s capabilities to drive revenue growth by delivering new products, eliminating redundant legacy systems, improving client satisfaction and retention and digitally expanding their brand presence and reach.
For consumers who increasingly expect frictionless digital services, this ability is no longer a differentiator for FIs, but a necessity. • Improve Efficiency . nCino customers leverage the platform’s capabilities to drive efficiency by eliminating cumbersome legacy systems, improving client satisfaction and retention, and digitally expanding their brand presence and reach.
As of January 31, 2023, we had 12 issued U.S. patents as well as one patent application pending in the U.S. We file patent applications where we believe there to be a strategic technological or business reason to do so.
Furthermore, effective patent, trademark, copyright, and trade secret protection may not be available in every country in which our products are available. As of January 31, 2024, we had 12 issued U.S. patents as well as one patent application pending in the U.S.
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Item 1. Business Overview nCino is the pioneer in cloud banking. Built by bankers for bankers, the nCino Bank Operating System is a single, multi-tenant software-as-a-service (SaaS) solution that helps financial institutions ("FI") modernize, innovate and outperform.
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Item 1. Business Overview Through its single software-as-a-service ("SaaS") platform, nCino helps financial institutions ("FI") serving corporate and commercial, small business, consumer, and mortgage customers modernize and more effectively onboard clients, open accounts, make loans and navigate the loan lifecycle, and effectively monitor and manage their portfolio.
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A leader in the global financial services technology industry, nCino is a proven partner that has helped more than 1,850 FIs of all sizes and complexities, including global, enterprise, regional and community banks; credit unions; new market entrants; and independent mortgage banks power distinctive experiences, drive growth efficiencies, and run with full integrity.
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Transforming how FIs operate through innovation, reputation and speed, nCino is partnered with more than 1,800 customers globally. With the nCino Bank Operating System, FIs can: • Digitally Serve Their Clients Across Lines of Business .

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeConsistent with the foregoing, we are exposed to a variety of risks, including risks associated with the following: • We derive all of our revenues from customers in the financial services industry, and any downturn or consolidation or decrease in technology spend in the financial services industry could adversely affect our business. • We have a limited operating history at the current scale of our business, which makes it difficult to predict our future operating results, and we may not achieve our expected operating results in the future. 9 Table of Contents • We have a history of operating losses and may not achieve or sustain profitability on a generally accepted accounting principles in the United States of America ("GAAP") basis in the future. • If we are unable to attract new customers or continue to broaden our existing customers’ use of our solutions, our revenue growth will be adversely affected. • If the market for cloud-based banking technology develops more slowly than we expect or changes in a way that we fail to anticipate, our sales would suffer and our results of operations would be adversely affected. • We may not be able to sustain our revenue growth rate in the future. • Our quarterly results may fluctuate significantly and may not fully reflect the underlying performance of our business. • We may not accurately predict the long-term rate of customer subscription renewals or adoption of our solutions, or any resulting impact on our revenues or operating results. • A breach of our security measures or those we rely on could result in unauthorized access to customer or their clients’ data, which may materially and adversely impact our reputation, business, and results of operations. • Fundamental elements of the nCino Bank Operating System are built on the Salesforce Platform and we rely on our agreement with Salesforce to provide this solution to our customers. • Because we recognize subscription revenues over the term of the contract, downturns or upturns in our business may not be reflected in our results of operations until future periods. • The markets in which we participate are intensely competitive and highly fragmented, and pricing pressure, new technologies, or other competitive dynamics could adversely affect our business and results of operations. • We depend on data centers operated by or on behalf of Salesforce, AWS and other third parties, and any disruption in the operation of these facilities could adversely affect our business and subject us to liability. • We may acquire or invest in companies, or pursue business partnerships, which may divert our management’s attention or result in dilution to our stockholders, and we may be unable to integrate acquired businesses and technologies successfully or achieve the expected benefits of such acquisitions, investments or partnerships. • Because one of our stockholders holds a substantial amount of our total outstanding common stock, the influence of our public stockholders over significant corporate actions is limited and sales by this stockholder could adversely affect the value of our common stock. • Our customers are highly regulated and subject to a number of challenges and risks.
Biggest changeConsistent with the foregoing, we are exposed to a variety of risks, including risks associated with the following: • We derive all of our revenues from customers in the financial services industry, and any downturn or consolidation or decrease in technology spend in the financial services industry could adversely affect our business. • We have a limited operating history at the current scale of our business, which makes it difficult to predict our future operating results, and we may not achieve our expected operating results in the future. • We have a history of losses and while we have achieved profitability in a quarterly period, we may not be able to achieve or sustain profitability on a generally accepted accounting principles in the United States of America ("GAAP") basis in the future. • If we are unable to attract new customers or continue to broaden our existing customers’ use of our solutions, our revenue growth will be adversely affected. • If the market for cloud-based banking technology develops more slowly than we expect or changes in a way that we fail to anticipate, our sales would suffer and our results of operations would be adversely affected. • We may not be able to sustain our revenue growth rate in the future. 9 Table of Contents • Our quarterly results may fluctuate significantly and may not fully reflect the underlying performance of our business. • We may not accurately predict the long-term rate of customer subscription renewals or adoption of our solutions, or any resulting impact on our revenues or operating results. • A breach of our security measures or those we rely on could result in unauthorized access to customer or their clients’ data, which may materially and adversely impact our reputation, business, and results of operations. • Fundamental elements of the nCino Bank Operating System are built on the Salesforce Platform and we rely on our agreement with Salesforce to provide this solution to our customers. • Because we recognize subscription revenues over the term of the contract, downturns or upturns in our business may not be reflected in our results of operations until future periods. • The markets in which we participate are intensely competitive and highly fragmented, and pricing pressure, new technologies, or other competitive dynamics could adversely affect our business and results of operations. • Our increased focus on the development and use of artificial intelligence and machine learning technologies in our solutions and our business, as well as our potential failure to effectively implement, use, and market these technologies, may result in reputational harm or liability, or could otherwise adversely affect our business. • We depend on data centers operated by or on behalf of Salesforce, AWS and other third parties, and any disruption in the operation of these facilities could adversely affect our business and subject us to liability. • We may acquire or invest in companies, or pursue business partnerships, which may divert our management’s attention or result in dilution to our stockholders, and we may be unable to integrate acquired businesses and technologies successfully or achieve the expected benefits of such acquisitions, investments or partnerships. • Because one of our stockholders holds a substantial amount of our total outstanding common stock, the influence of our public stockholders over significant corporate actions is limited and sales by this stockholder could adversely affect the value of our common stock. • Our customers are highly regulated and subject to a number of challenges and risks.
Factors that may cause fluctuations in our quarterly financial results include, without limitation, those listed below: • our ability to retain current customers or attract new customers; • the activation, delay in activation, or cancellation of large blocks of users by customers; • the timing of recognition of professional services revenues; • the amount and timing of operating expenses related to the maintenance and expansion of our business, operations, and infrastructure; 12 Table of Contents • acquisitions of our customers, to the extent the acquirer elects not to continue using our solutions or reduces subscriptions to our solutions; • significant disruptions or distress in the FI industry; • customer renewal rates; • increases or decreases in the number of users licensed or pricing changes upon renewals of customer contracts; • network outages or security breaches; • general economic, industry, and market conditions; • changes in our pricing policies or those of our competitors; • seasonal variations in sales of our solutions, which have historically been highest in the fourth quarter of our fiscal year; • the timing and amount of litigation and litigation-related expenses; • the timing and success of new product introductions by us or our competitors or any other change in the competitive dynamics of our industry, including consolidation among competitors, customers, or strategic partners; and • the timing of expenses related to the development or acquisition of technologies or businesses and potential future charges for impairment of goodwill or intangible assets from acquired companies.
Factors that may cause fluctuations in our quarterly financial results include, without limitation, those listed below: • our ability to retain current customers or attract new customers; • the activation, delay in activation, or cancellation of large blocks of users by customers; • the timing of recognition of professional services revenues; • the amount and timing of operating expenses related to the maintenance and expansion of our business, operations, and infrastructure; • acquisitions of our customers, to the extent the acquirer elects not to continue using our solutions or reduces subscriptions to our solutions; • significant disruptions or distress in the FI industry; • customer renewal rates; 12 Table of Contents • increases or decreases in the number of users licensed or pricing changes upon renewals of customer contracts; • network outages or security breaches; • general economic, industry, and market conditions; • changes in our pricing policies or those of our competitors; • seasonal variations in sales of our solutions, which have historically been highest in the fourth quarter of our fiscal year; • the timing and amount of litigation and litigation-related expenses; • the timing and success of new product introductions by us or our competitors or any other change in the competitive dynamics of our industry, including consolidation among competitors, customers, or strategic partners; and • the timing of expenses related to the development or acquisition of technologies or businesses and potential future charges for impairment of goodwill or intangible assets from acquired companies.
Future securities issuances could result in significant dilution to our stockholders and impair the market price of our common stock. Future issuances of shares of our common stock, or the perception that these sales may occur, could depress the market price of our common stock and result in dilution to existing holders of our common stock.
Future securities issuances could result in significant dilution to our existing stockholders and impair the market price of our common stock. Future issuances of shares of our common stock, or the perception that these sales may occur, could depress the market price of our common stock and result in dilution to existing holders of our common stock.
The CJEU upheld the validity of standard contractual clauses ("SCCs") as a legal mechanism to transfer personal data but companies relying on SCCs will need to carry out a transfer privacy impact assessment which, among other things, assesses laws governing access to personal data in the recipient country and considers whether supplementary measures that provide privacy protections additional to those provided under SCCs will need to be implemented to ensure an ‘essentially equivalent’ level of data protection to that afforded in the EEA.
The CJEU upheld the validity of standard contractual clauses ("SCCs") as a legal mechanism to transfer personal data but companies relying on SCCs will need to carry out a transfer privacy impact assessment ("TIA") which, among other things, assesses laws governing access to personal data in the recipient country and considers whether supplementary measures that provide privacy protections additional to those provided under SCCs will need to be implemented to ensure an ‘essentially equivalent’ level of data protection to that afforded in the EEA.
The market price of our common stock may fluctuate or decline significantly in response to numerous factors, many of which are beyond our control, including: • variations between our actual operating results and the expectations of securities analysts, investors, and the financial community; • any forward-looking financial or operating information we may provide to the public or securities analysts, any changes in this information, or our failure to meet expectations based on this information; • actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow us, or our failure to meet these estimates or the expectations of investors; • additional shares of our common stock being sold into the market by us or our existing stockholders, or the anticipation of such sales; • hedging activities by market participants; • announcements by us or our competitors of significant products or features, technical innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments; • changes in operating performance and stock market valuations of companies in our industry, including our competitors; • price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole, including inflation and rising interest rates; • lawsuits threatened or filed against us; • developments in new legislation and pending lawsuits or regulatory actions, including interim or final rulings by judicial or regulatory bodies; and • other events or factors, political conditions, election cycles, war or incidents of terrorism, or responses to these events.
The market price of our common stock may fluctuate or decline significantly in response to numerous factors, many of which are beyond our control, including: • variations between our actual operating results and the expectations of securities analysts, investors, and the financial community; • any forward-looking financial or operating information we may provide to the public or securities analysts, any changes in this information, or our failure to meet expectations based on this information; • actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow us, or our failure to meet these estimates or the expectations of investors; • additional shares of our common stock being sold into the market by us or our existing stockholders, or the anticipation of such sales; • hedging activities by market participants; • announcements by us or our competitors of significant products or features, technical innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments; • changes in operating performance and stock market valuations of companies in our industry, including our competitors; • price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole, including inflation and rising interest rates; • lawsuits threatened or filed against us; • developments in new legislation and pending lawsuits or regulatory actions, including interim or final rulings by judicial or regulatory bodies; and 27 Table of Contents • other events or factors, political conditions, election cycles, war or incidents of terrorism, or responses to these events.
For example, as a result of obligations under some of our customer contracts, we are required to comply with certain provisions of the Gramm-Leach-Bliley Act related to the privacy of consumer information and may be subject to other privacy and data security laws because of the solutions we provide to FIs.
For example, as a result of obligations under some of our customer contracts, we are required to comply with certain provisions of the Gramm-Leach-Bliley Act ("GLBA") related to the privacy of consumer information and may be subject to other privacy and data security laws because of the solutions we provide to FIs.
For instance, we incurred significant costs in connection with the SimpleNexus acquisition. In addition, nCino has limited experience in acquiring other businesses. If an acquired business, including SimpleNexus, fails to meet our expectations, our operating results, business, and financial position may suffer.
For instance, we incurred significant costs in connection with the SimpleNexus acquisition. In addition, nCino has limited experience in acquiring other businesses. If an acquired business fails to meet our expectations, our operating results, business, and financial position may suffer.
In addition, we face risks in doing business internationally that could adversely affect our business, including: • unanticipated costs; • the need to localize and adapt our solutions for specific countries; • complying with varying and sometimes conflicting data privacy laws and regulations; 21 Table of Contents • difficulties in staffing and managing foreign operations, including employment laws and regulations; • unstable regional, economic, or political conditions; • different pricing environments, longer sales cycles, and collections issues; • new and different sources of competition; • weaker protection for intellectual property and other legal rights than in the U.S. and practical difficulties in enforcing intellectual property and other rights outside of the U.S.; • laws and business practices favoring local competitors; • compliance challenges related to the complexity of multiple, conflicting, and changing governmental laws and regulations, including employment, tax, and anti-bribery laws and regulations; • increased financial accounting and reporting burdens and complexities; • restrictions on the transfer of funds; and • adverse tax consequences.
In addition, we face risks in doing business internationally that could adversely affect our business, including: • unanticipated costs; • the need to localize and adapt our solutions for specific countries; • complying with varying and sometimes conflicting data privacy laws and regulations; • difficulties in staffing and managing foreign operations, including employment laws and regulations; • unstable regional, economic, or political conditions; • different pricing environments, longer sales cycles, and collections issues; • new and different sources of competition; • weaker protection for intellectual property and other legal rights than in the U.S. and practical difficulties in enforcing intellectual property and other rights outside of the U.S.; • laws and business practices favoring local competitors; • compliance challenges related to the complexity of multiple, conflicting, and changing governmental laws and regulations, including employment, tax, and anti-bribery laws and regulations; • increased financial accounting and reporting burdens and complexities; • restrictions on the transfer of funds; and • adverse tax consequences.
An adverse outcome of a dispute may require us to: • pay substantial damages, including treble damages, if we are found to have willfully infringed a third party’s patents or copyrights; • cease developing or selling any elements of our solutions that rely on technology that is alleged to infringe or misappropriate the intellectual property of others; • enter into potentially unfavorable royalty or license agreements in order to obtain the right to use necessary technologies or intellectual property rights; • expend additional development resources to attempt to redesign our solutions or otherwise develop non-infringing technology, which may not be successful; and 24 Table of Contents • indemnify our customers and other third parties.
An adverse outcome of a dispute may require us to: • pay substantial damages, including treble damages, if we are found to have willfully infringed a third party’s patents or copyrights; • cease developing or selling any elements of our solutions that rely on technology that is alleged to infringe or misappropriate the intellectual property of others; • enter into potentially unfavorable royalty or license agreements in order to obtain the right to use necessary technologies or intellectual property rights; • expend additional development resources to attempt to redesign our solutions or otherwise develop non-infringing technology, which may not be successful; and • indemnify our customers and other third parties.
These concerns or other considerations may cause FIs to choose not to adopt cloud-based banking technology such as ours or to adopt them more slowly than we anticipate, either of which would adversely affect us. Our future success also depends on our ability to sell additional applications and functionality, such as nIQ and SimpleNexus, to our current and prospective customers.
These concerns or other considerations may cause FIs to choose not to adopt cloud-based banking technology such as ours or to adopt them more slowly than we anticipate, either of which would adversely affect us. Our future success also depends on our ability to sell additional applications and functionality to our current and prospective customers.
If we are unable to maintain consistent revenue growth, the price of our common stock could decline or otherwise be volatile and it may be difficult for us to achieve and maintain profitability. Our quarterly results may fluctuate significantly and may not fully reflect the underlying performance of our business.
If we are unable to maintain consistent revenue growth, our business could be adversely affected, the price of our common stock could decline or otherwise be volatile and it may be difficult for us to achieve and maintain profitability. Our quarterly results may fluctuate significantly and may not fully reflect the underlying performance of our business.
An expiration or termination of the Salesforce Agreement would cause us to incur significant time and expense to acquire rights to, or develop, a replacement solution and we may not be successful in these efforts, which could cause the nCino Bank Operating System to become obsolete.
An expiration or termination of our agreement with Salesforce would cause us to incur significant time and expense to acquire rights to, or develop, a replacement solution and we may not be successful in these efforts, which could cause the nCino Bank Operating System to become obsolete.
In addition, Salesforce has the right to terminate its agreement with us in certain circumstances, including in the event of a material breach of the Salesforce Agreement by us. If Salesforce terminates our agreement for cause, it would not be required to provide the wind-down period described above.
In addition, Salesforce has the right to terminate their agreement with us in certain circumstances, including in the event of a material breach by us. If Salesforce terminates our agreement for cause, it would not be required to provide the wind-down period described above.
We also cannot assure you that the pricing or other terms in any renewal with Salesforce would be favorable to us, and if not, our business and operating results may be materially and adversely affected.
We also cannot assure you that the pricing or other terms in any renewal with Salesforce would be favorable to us, and if they are not, our business and operating results may be materially and adversely affected.
Any failure or perceived failure by us, or any third parties with which we do business, to comply with these laws, rules, and regulations, or with other obligations to which we or such third parties are or may become subject, may result in actions or other claims against us by governmental entities or private actors, the expenditure of substantial costs, time, and other resources, or the incurrence of fines, penalties, or other liabilities.
Any failure or perceived failure by us, or any third parties with which we do business, to comply with these laws, rules, and regulations, or with other obligations to which we or such third parties are or may become subject, may result in actions or other claims against us by governmental entities or private actors, the expenditure of substantial costs, time, and other 17 Table of Contents resources, or the incurrence of fines, penalties, or other liabilities.
Furthermore, as we develop or acquire additional functionality, such as SimpleNexus, we may gain greater access to PII. We maintain policies, procedures, and technological safeguards designed to protect the confidentiality, integrity, and availability of this information and our information technology systems. However, we and our third party service providers, frequently defend against and respond to data security incidents.
Furthermore, as we develop or acquire additional functionality, such as nCino Mortgage, we may gain greater access to PII. We maintain policies, procedures, and technological safeguards designed to protect the confidentiality, integrity, and availability of this information and our information technology systems. However, we and our third party service providers, frequently defend against and respond to data security incidents.
Complying with the GDPR may cause us to incur substantial operational and compliance costs or require us to change our business practices. Despite our efforts to bring practices into compliance with the GDPR, we may not be successful either due to internal or external factors such as resource allocation limitations or a lack of vendor cooperation.
Complying with the GDPR may cause us to incur substantial operational and compliance costs or require us to change our business practices. Despite our efforts to bring practices into compliance with the GDPR, we 16 Table of Contents may not be successful either due to internal or external factors such as resource allocation limitations or a lack of vendor cooperation.
Additionally, we may be bound by contractual requirements 16 Table of Contents applicable to our collection, use, processing, and disclosure of various types of information including financial and PII, and may be bound by, or voluntarily comply with, self-regulatory or other industry standards relating to these matters that may further change as laws, rules, and regulations evolve.
Additionally, we may be bound by contractual requirements applicable to our collection, use, processing, and disclosure of various types of information including financial and PII, and may be bound by, or voluntarily comply with, self-regulatory or other industry standards relating to these matters that may further change as laws, rules, and regulations evolve.
Errors, defects, or other problems could also result in reduced sales or a loss of, or delay in, the market acceptance of our solutions. If we fail to accurately anticipate and respond to rapid changes in the industry in which we operate, our ability to attract and retain customers could be impaired and our competitive position could be harmed.
Errors, defects, or other problems could also result in reduced sales or a loss of, or delay in, the market acceptance of our solutions. 21 Table of Contents If we fail to accurately anticipate and respond to rapid changes in the industry in which we operate, our ability to attract and retain customers could be impaired and our competitive position could be harmed.
We may 20 Table of Contents not be able to enhance aspects of our solutions successfully or introduce and gain market acceptance of new applications or improvements in a timely manner, or at all. Additionally, we must continually modify and enhance our solutions to keep pace with changes in software applications, database technology, and evolving technical standards and interfaces.
We may not be able to enhance aspects of our solutions successfully or introduce and gain market acceptance of new applications or improvements in a timely manner, or at all. Additionally, we must continually modify and enhance our solutions to keep pace with changes in software applications, database technology, and evolving technical standards and interfaces.
Personal privacy, information security, and data protection are significant issues in the U.S., the European Union (“EU”), and a number of other jurisdictions where we offer our solutions. The regulatory framework governing the collection, processing, storage, and use of certain information, particularly financial and other PII, is rapidly evolving.
Personal privacy, information security, and data protection are significant issues in the U.S., the European Union (“EU”), the United Kingdom ("UK") and a number of other jurisdictions where we offer our solutions. The regulatory framework governing the collection, processing, storage, and use of certain information, particularly financial and other PII, is rapidly evolving.
Fundamental elements of the nCino Bank Operating System, including our client onboarding, loan origination, and deposit account opening applications, are built on the Salesforce Platform and we rely on the Salesforce Agreement to use the Salesforce Platform in conjunction with this solution, including for hosting infrastructure and data center operations.
Fundamental elements of the nCino Bank Operating System, including our client onboarding, loan origination, and deposit account opening applications, are built on the Salesforce Platform and we rely on our agreement with Salesforce to use 14 Table of Contents the Salesforce Platform in conjunction with this solution, including for hosting infrastructure and data center operations.
Similarly, the European Economic Area (the "EEA") (comprised of the EU Member States and Iceland, Liechtenstein and Norway) adopted the General Data Protection Regulation (2016/679) (the "EU GDPR") in May 2018 and the UK implemented the EU GDPR by virtue of section 3 of the European Union (Withdrawal) Act 2018 (known as the "UK GDPR", and together with the "EU GDPR", the "GDPR").
Similarly, the European Economic Area (the "EEA") (comprised of the EU Member States and Iceland, Liechtenstein and Norway) adopted the General Data Protection Regulation (2016/679) (the "EU GDPR") in May 2018 and the UK implemented the EU GDPR by virtue of section 3 of the European Union (Withdrawal) Act 2018 which sits alongside the UK Data Protection Act 2018 (known as the "UK GDPR", and together with the "EU GDPR", the "GDPR").
In general, the revenues related to implementation and other professional services we 19 Table of Contents provide are recognized on a proportional performance basis, and delays and difficulties in these engagements could result in losses on these contracts. In addition, our customers often require complex acceptance testing related to the implementation of our solutions.
In general, the revenues related to implementation and other professional services we provide are recognized on a proportional performance basis, and delays and difficulties in these engagements could result in losses on these contracts. In addition, our customers often require complex acceptance testing related to the implementation of our solutions.
We believe our corporate culture is one of our fundamental strengths, as we believe it enables us to attract and retain top talent and deliver superior results for our customers. As we grow, we may find it difficult to preserve our corporate culture, which could reduce our ability to innovate and operate effectively.
We believe our corporate culture is one of our fundamental strengths, as we believe it enables us to attract and retain top talent and deliver superior results for our customers. As we grow, we may find it difficult to preserve our corporate 20 Table of Contents culture, which could reduce our ability to innovate and operate effectively.
Moreover, policing unauthorized use of our technologies, trade secrets, and intellectual property is difficult, expensive, and time-consuming, particularly in foreign countries where the laws may not be as protective of intellectual property rights as those in the U.S. and where mechanisms for enforcement of intellectual 23 Table of Contents property rights may be weak.
Moreover, policing unauthorized use of our technologies, trade secrets, and intellectual property is difficult, expensive, and time-consuming, particularly in foreign countries where the laws may not be as protective of intellectual property rights as those in the U.S. and where mechanisms for enforcement of intellectual property rights may be weak.
As of January 31, 2023, we had 12 issued patents and one patent application pending relating to the nCino Bank Operating System in the U.S.
As of January 31, 2024, we had 12 issued patents and one patent application pending relating to the nCino Bank Operating System in the U.S.
If we experience one or more ownership changes as a result of future transactions in our stock, then we may be limited in our ability to use our NOL carryforwards, pre-change tax attributes or deductions to offset our future taxable income, if any.
If we experience one or more ownership changes as a result of future transactions in our stock, then we may be 26 Table of Contents limited in our ability to use our NOL carryforwards, pre-change tax attributes or deductions to offset our future taxable income, if any.
Our revenues include the revenues of SimpleNexus from the date of acquisition on January 7, 2022. Our total number of employees increased from 436 as of January 31, 2018 to 1,791 as of January 31, 2023. Managing and sustaining a growing workforce and customer base geographically-dispersed in the U.S. and internationally requires substantial management effort, infrastructure, and operational capabilities.
Our revenues include the revenues of SimpleNexus from the date of acquisition on January 7, 2022. Our total number of employees increased from 436 as of January 31, 2018 to 1,653 as of January 31, 2024. Managing and sustaining a growing workforce and customer base geographically-dispersed in the U.S. and internationally requires substantial management effort, infrastructure, and operational capabilities.
As part of these requirements, we established and maintain effective disclosure and financial controls and make changes to our corporate 29 Table of Contents governance practices. Compliance with these requirements has and will continue to increase our legal and financial compliance costs and will make some activities more time-consuming.
As part of these requirements, we established and maintain effective disclosure and financial controls and make changes to our corporate governance practices. Compliance with these requirements has and will continue to increase our legal and financial compliance costs and will make some activities more time-consuming.
Increasing our customer base and expanding customer adoption within and across business lines will depend, to a significant extent, on our ability to effectively expand our sales and marketing operations and activities. We plan to continue to expand our direct sales force both domestically and internationally for the foreseeable future.
Increasing our customer base and expanding customer adoption within and across business lines will depend, to a significant extent, on our ability to effectively expand our sales and marketing operations and activities. We plan to continue to 23 Table of Contents expand our direct sales force both domestically and internationally for the foreseeable future.
Further, our products are flexible and complex software solutions and 13 Table of Contents there is a risk that configurations of, or defects in, our solutions or errors in implementation could create vulnerabilities to security breaches.
Further, our products are flexible and complex software solutions and there is a risk that configurations of, or defects in, our solutions or errors in implementation could create vulnerabilities to security breaches.
A vulnerability in a third-party provider’s software or systems, a failure of our third-party providers’ safeguards, policies or procedures, or a breach of a third-party provider’s software or systems could result in the compromise of the confidentiality, integrity, or availability of our systems or the data housed in our solutions.
A vulnerability in a third-party provider’s software or systems, a failure of our third-party 13 Table of Contents providers’ safeguards, policies or procedures, or a breach of a third-party provider’s software or systems could result in the compromise of the confidentiality, integrity, or availability of our systems or the data housed in our solutions.
If our revenues or operating results fall below the expectations of analysts or investors or below any forecasts we may provide to the market, or if the forecasts we provide to the market are below the expectations of analysts or investors, the price 26 Table of Contents of our common stock could decline substantially.
If our revenues or operating results fall below the expectations of analysts or investors or below any forecasts we may provide to the market, or if the forecasts we provide to the market are below the expectations of analysts or investors, the price of our common stock could decline substantially.
We cannot assure you that such third parties will maintain such software or continue to make it available. We also rely on confidentiality agreements, consulting agreements, work-for-hire agreements, and invention assignment agreements with our employees, consultants, and others.
We cannot assure you that such third parties will maintain such software or continue to make it available. We also rely on confidentiality 24 Table of Contents agreements, consulting agreements, work-for-hire agreements, and invention assignment agreements with our employees, consultants, and others.
We are required to disclose significant changes made in our internal controls procedure on a quarterly basis. Our compliance with Section 404 has required, and will continue to require, that we incur substantial accounting expense and expend significant management efforts.
We are required to disclose significant changes made in our internal controls procedure on a quarterly basis. 30 Table of Contents Our compliance with Section 404 has required, and will continue to require, that we incur substantial accounting expense and expend significant management efforts.
For example, the current rising interest rate environment in the U.S., undertaken as a means to manage inflation, has had an impact on the real estate market in the U.S. and specifically, the demand for mortgage and mortgage-related products and services, which has had a negative impact on our SimpleNexus business and may continue to adversely impact that business to the extent the rising interest rate environment persists.
For example, the higher interest rate environment in the U.S., undertaken as a means to manage inflation, has had an impact on the real estate market in the U.S. and specifically, the demand for mortgage and mortgage-related products and services, which has had a negative impact on our nCino Mortgage business and may continue to adversely impact that business to the extent the higher interest rate environment persists.
Since our inception, our business has grown rapidly, which has resulted in a large increase in our employee headcount, expansion of our infrastructure, enhancement of our internal systems, and other significant changes and additional complexities. Our revenues increased from $204.3 million for fiscal 2021 to $273.9 million for fiscal 2022 to $408.3 million for fiscal 2023.
Since our inception, our business has grown rapidly, which has resulted in a large increase in our employee headcount, expansion of our infrastructure, enhancement of our internal systems, and other significant changes and additional complexities. Our revenues increased from $273.9 million for fiscal 2022 to $408.3 million for fiscal 2023 to $476.5 million for fiscal 2024.
Many FIs have invested substantial personnel and financial resources in legacy software, and these FIs may be reluctant, unwilling, or unable to convert from their existing systems to our solutions.
Many FIs have invested substantial personnel and financial resources in 11 Table of Contents legacy software, and these FIs may be reluctant, unwilling, or unable to convert from their existing systems to our solutions.
Many of the provisions of the Tax Cuts and Jobs Act still require 25 Table of Contents guidance through the issuance and/or finalization of regulations by the U.S.
Many of the provisions of the Tax Cuts and Jobs Act still require guidance through the issuance and/or finalization of regulations by the U.S.
Our revenues increased from $204.3 million for fiscal 2021 to $273.9 million for fiscal 2022 to $408.3 million for fiscal 2023. Our revenues include the revenues of SimpleNexus from the date of acquisition on January 7, 2022. We may not be able to sustain revenue growth consistent with our recent history, if at all.
Our revenues increased from $273.9 million for fiscal 2022 to $408.3 million for fiscal 2023 to $476.5 million for fiscal 2024. Our revenues include the revenues of SimpleNexus from the date of acquisition on January 7, 2022. However, we may not be able to sustain revenue growth consistent with our recent history, if at all.
As we grow our customer base, we will 22 Table of Contents need to further invest in and expand our customer support and training organization, which could strain our team and infrastructure and reduce profit margins.
As we grow our customer base, we will need to further invest in and expand our customer support and training organization, which could strain our team and infrastructure and reduce profit margins.
In addition, the EU GDPR prohibits the international transfer of personal data from the EEA to countries outside of the EEA unless made to a country deemed to have adequate data privacy laws by the European Commission or a data transfer mechanism in accordance with the EU GDPR has been put in place.
In addition, the EU GDPR prohibits the international transfer of personal data from the EEA to countries outside of the EEA unless made to a country deemed to have adequate data privacy laws by the European Commission or a data transfer mechanism in accordance with the EU GDPR has been put in place or a derogation under the EU GDPR can be relied on.
These laws and regulations generally prohibit companies and their employees and intermediaries from authorizing, offering, or providing improper payments or benefits to officials and other recipients for improper purposes.
These laws and regulations generally prohibit companies and their employees and intermediaries from authorizing, offering, or providing 22 Table of Contents improper payments or benefits to officials and other recipients for improper purposes.
Based on the total number of shares of our common stock outstanding as of January 31, 2023, entities affiliated with Insight Partners (“Insight Partners”) holds approximately 35% of our total outstanding common stock.
Based on the total number of shares of our common stock outstanding as of January 31, 2024, entities affiliated with Insight Partners (“Insight Partners”) holds approximately 34% of our total outstanding common stock.
The GDPR imposes a number of obligations on controllers, including, among others: (i) accountability and transparency requirements which require controllers to demonstrate and record compliance with the GDPR and to provide more detailed information to data subjects regarding processing; (ii) enhanced requirements for obtaining valid consent; (iii) obligations to consider data protection as any new products or services are developed and to limit the amount of personal data processed; (iv) obligations to comply with data protection rights of data subjects including a right of access to and rectification of personal data, a right to obtain restriction of processing or to object to processing of personal data and a right to ask for a copy of personal data to be provided to a third party in a useable format and erasing personal data in certain circumstances; (v) obligations to implement appropriate technical and organizational security measures to safeguard personal data; and (vi) obligations to report certain personal data breaches to the relevant supervisory authority without undue delay (and no later than 72 hours where feasible).
The GDPR imposes a number of obligations on controllers, including, among others: (i) accountability and transparency requirements which require controllers to demonstrate and record compliance with the GDPR and to provide more detailed information to data subjects regarding processing; (ii) enhanced requirements for obtaining valid consent where consent is the lawful basis for processing; (iii) obligations to consider data protection as any new products or services are developed and to limit the amount of personal data processed; (iv) obligations to comply with data protection rights of data subjects including a right of access to and rectification of personal data, a right to obtain restriction of processing or to object to processing of personal data and a right to ask for a copy of personal data to be provided to a third party in a useable format and erasing personal data in certain circumstances and the right not to be subject to solely automated decision-making; (v) obligations to implement appropriate technical and organizational security measures to safeguard personal data; and (vi) obligations to report certain personal data breaches to the relevant supervisory authority without undue delay (and no later than 72 hours where feasible) and affected individuals, where the personal data breach is likely to result in a high risk to their rights and freedoms.
On February 11, 2022, we entered into Credit Agreement by and among the Company, nCino OpCo, Inc., certain subsidiaries of the Company as guarantors, and Bank of America, N.A. as lender, pursuant to which we received access to a revolving Credit Facility of up to $50.0 million.
On February 11, 2022, we entered into Credit Agreement by and among the Company, nCino OpCo, Inc., certain subsidiaries of the Company as guarantors, and Bank of America, N.A. as lender, as amended by that certain First Amendment, dated February 9, 2024, pursuant to which we received access to a revolving Credit Facility of up to $50.0 million.
We generated net losses attributable to nCino of $40.5 million, $49.4 million, and $102.7 million for the fiscal years ended January 31, 2021, 2022, and 2023, respectively. Our net loss includes the results of operations of SimpleNexus from the date of acquisition on January 7, 2022. We had an accumulated deficit of $310.3 million at January 31, 2023.
We generated net losses attributable to nCino of $49.4 million, $102.7 million, and $42.3 million for the fiscal years ended January 31, 2022, 2023, and 2024, respectively. Our net loss includes the results of operations of SimpleNexus from the date of acquisition on January 7, 2022. We had an accumulated deficit of $352.8 million at January 31, 2024.
As a result, we may in the future be required to change our pricing model, reduce our prices, or accept other unfavorable contract terms, any of which could adversely affect our revenues, gross margin, profitability, financial position, and/or cash flow.
As a result, we may in the future be required to change our pricing model, reduce our prices, or accept other unfavorable contract terms, any of which could adversely affect our revenues, gross margin, profitability, financial position, and/or cash flow. Our business faces significant risks from diverse security threats.
These provisions include the following: • establish a classified board of directors so that not all members of our board of directors are elected at one time; • permit the board of directors to establish the number of directors and fill any vacancies and newly-created directorships; • provide that directors may only be removed for cause; • require super-majority voting to amend some provisions in our amended and restated certificate of incorporation and bylaws; • authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan; • prohibit stockholders from calling special meetings of stockholders; • prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders; • provide that the board of directors is expressly authorized to make, alter, or repeal our bylaws; • restrict the forum for certain litigation against us to Delaware; and • establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings. 27 Table of Contents Any provision of our amended and restated certificate of incorporation or bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.
These provisions include the following: • establish a classified board of directors so that not all members of our board of directors are elected at one time; 28 Table of Contents • permit the board of directors to establish the number of directors and fill any vacancies and newly-created directorships; • provide that directors may only be removed for cause; • require super-majority voting to amend some provisions in our amended and restated certificate of incorporation and bylaws; • authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan; • prohibit stockholders from calling special meetings of stockholders; • prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders; • provide that the board of directors is expressly authorized to make, alter, or repeal our bylaws; • restrict the forum for certain litigation against us to Delaware; and • establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.
From time to time, we consider potential strategic transactions, including acquisitions of, or investments in, businesses, technologies, services, solutions, and other assets. For example, in fiscal 2022 we acquired SimpleNexus, our 17 Table of Contents largest acquisition to date.
From time to time, we consider potential strategic transactions, including acquisitions of, or investments in, businesses, technologies, services, solutions, and other assets. For example, in March 2024 we announced our acquisition of DocFox and in fiscal 2022, we acquired SimpleNexus, our largest acquisition to date.
As a public company, we have incurred and will continue to incur substantial legal, accounting, and other expenses that we did not incur as a private company.
As a public company, we have incurred and will continue to incur substantial legal, accounting, and other expenses.
Use of, and reliance on, cloud-based banking technology is still at an early stage and we do not know whether FIs will continue to adopt cloud-based banking technology such as the nCino Bank Operating System in the future, or whether the market will change in ways we do not anticipate.
Use of, and reliance on, cloud-based banking technology continues to evolve and we do not know whether FIs will continue to adopt cloud-based banking technology such as the nCino Bank Operating System in the future, or whether the market will change in ways we do not anticipate.
If we are successful in acquiring additional businesses, such as SimpleNexus, we may not achieve the anticipated benefits from the acquired business due to a number of factors, including: • our inability to integrate or benefit from acquired technologies or services; • unanticipated costs or liabilities associated with the acquisition; • incurrence of acquisition-related costs; • difficulty integrating the technology, accounting systems, operations, control environments, and personnel of the acquired business and integrating the acquired business or its employees into our culture; • difficulties and additional expenses associated with supporting legacy solutions and infrastructure of the acquired business; • difficulty converting the customers of the acquired business to our solutions and contract terms, including disparities in terms; • additional costs for the support or professional services model of the acquired company; • diversion of management’s attention and other resources; • adverse effects to our existing business relationships with business partners and customers; • the issuance of additional equity securities that could dilute the ownership interests of our stockholders; • incurrence of debt on terms unfavorable to us or that we are unable to repay; • incurrence of substantial liabilities; • difficulties retaining key employees of the acquired business; and • adverse tax consequences, substantial depreciation, or deferred compensation charges.
If we are successful in acquiring additional businesses we may not achieve the anticipated benefits from the acquired business due to a number of factors, including: • our inability to integrate or benefit from acquired technologies or services; • unanticipated costs or liabilities associated with the acquisition; • incurrence of acquisition-related costs; • difficulty integrating the technology, accounting systems, operations, control environments, and personnel of the acquired business and integrating the acquired business or its employees into our culture; • difficulties and additional expenses associated with supporting legacy solutions and infrastructure of the acquired business; • difficulty converting the customers of the acquired business to our solutions and contract terms, including disparities in terms; • additional costs for the support or professional services model of the acquired company; • diversion of management’s attention and other resources; • adverse effects to our existing business relationships with business partners and customers; • the issuance of additional equity securities that could dilute the ownership interests of our stockholders; • incurrence of debt on terms unfavorable to us or that we are unable to repay; • incurrence of substantial liabilities; • difficulties retaining key employees of the acquired business; and • adverse tax consequences, substantial depreciation, or deferred compensation charges. 19 Table of Contents In addition, a significant portion of the purchase price of companies we acquire may be allocated to acquired goodwill and other intangible assets, which must be assessed for impairment at least annually.
Our failure to comply with laws and regulations applicable to us as a technology provider to FIs could adversely affect our business and results of operations, increase costs and impose constraints on the way we conduct our business. • We are presently subject to a putative class action civil suit involving alleged violations of antitrust laws relating to our hiring and wage practices and a purported stockholder derivative lawsuit alleging violation of fiduciary duties with the series of mergers in which we became the parent of nCino OpCo and SimpleNexus.
Our failure to comply with laws and regulations applicable to us as a technology provider to FIs could adversely affect our business and results of operations, increase costs and impose constraints on the way we conduct our business. • We are presently subject to a purported stockholder derivative lawsuit alleging violation of fiduciary duties with the series of mergers in which we became the parent of nCino OpCo and SimpleNexus.
Even if we become profitable on a GAAP basis, we may not be able to maintain or increase our level of profitability. We intend to continue to support further growth and extend the functionality of our solutions in future periods.
While we have been profitable on a GAAP basis for a quarter, we may not be able to maintain or increase our level of profitability. We intend to continue to support further growth and extend the functionality of our solutions in future periods.
Moreover, domestic and international economies have from time-to-time been impacted by falling demand for a variety of goods and services, tariffs and other trade issues, threatened sovereign defaults and ratings downgrades, restricted credit, threats to major multinational companies, poor liquidity, reduced corporate profitability, volatility in credit, equity and foreign exchange markets, bankruptcies, and overall uncertainty.
Moreover, domestic and international economies have from time-to-time been impacted by falling demand for a variety of goods and services, tariffs and other trade issues, threatened sovereign defaults and ratings downgrades, restricted credit, threats to major multinational companies, poor liquidity, reduced corporate profitability, volatility in credit, equity and foreign exchange markets, bankruptcies, and overall uncertainty, including uncertainty as a result of geopolitical events such as the conflicts in and around Ukraine, the Middle East and other parts of the world.
We have encountered and will encounter risks and uncertainties frequently experienced by growing companies in the technology industry, such as the risks and uncertainties described in this Annual Report on Form 10-K.
We have encountered and will encounter risks and uncertainties frequently experienced by growing companies in the technology industry, such as the risks and uncertainties described in this Annual Report on Form 10-K and others we may not be able to presently identify.
We have a history of operating losses and may not achieve or sustain profitability on a GAAP basis in the future. We began operations in late 2011 and have experienced net losses since inception.
We have a history of losses and while we have achieved profitability in a quarterly period, we may not be able to achieve or sustain profitability on a GAAP basis in the future. We began operations in late 2011 and have experienced net losses since inception.
As of January 31, 2023, we had $30.0 million outstanding under our Credit Facility. The Credit Facility contains affirmative and restrictive covenants that limit our operating ability including to, among other things, dispose of assets, merge with other companies, incur additional indebtedness and liens, engage in new businesses, acquire certain other companies and modify organizational documents.
The Credit Facility contains affirmative and restrictive covenants that limit our operating ability including to, among other things, dispose of assets, merge with other companies, incur additional indebtedness and liens, engage in new businesses, acquire certain other companies and modify organizational documents.
Additionally, changes in management of our customers could result in delays or cancellations of the implementation of our solutions. It is also possible that the larger FIs that result from business combinations could have greater leverage in negotiating price or other terms with us or could decide to replace some or all of the elements of our solutions.
It is also possible that the larger FIs that result from 10 Table of Contents business combinations could have greater leverage in negotiating price or other terms with us or could decide to replace some or all of the elements of our solutions.
In the future, if our acquisitions do not yield expected returns, we may be required to take charges to our operating results based on this impairment assessment process, which could adversely affect our results of operations.
In the future, if our acquisitions do not yield expected returns, we may be required to take charges to our operating results based on this impairment assessment process, which could adversely affect our results of operations. Our customers are highly regulated and subject to a number of challenges and risks.
It is possible these conditions may persist, deteriorate or reoccur. If any of our customers merge with or are acquired by other entities, such as FIs that have internally developed banking technology solutions or that are not our customers or use our solutions less, we may lose business.
If as a result of these or other factors any of our customers merge with or are acquired by other entities, such as FIs that have internally developed banking technology solutions or that are not our customers or use our solutions less, we may lose business.
Any claim of infringement, misappropriation, or other violation of intellectual property rights by a third party, even those without merit, could cause us to incur substantial costs defending against the claim, could distract our management from our business, and could deter customers or potential customers from purchasing our solutions.
Any claim of infringement, misappropriation, or other violation of intellectual property rights by a third party, even those without merit, could cause us to incur substantial costs defending against the claim, could distract our management from our business, and could deter customers or potential customers from purchasing our solutions. 25 Table of Contents There can be no assurance that we will successfully defend third-party intellectual property claims.
Cyberattacks and other malicious internet-based activity continue to increase and evolve, and cloud-based providers of products and services have been and are expected to continue to be targeted.
Cyberattacks and other malicious internet-based activity, including increased threats from the use of artificial intelligence, continue to increase and evolve, and cloud-based providers of products and services have been and are expected to continue to be targeted.
In addition, the Credit Facility is secured by substantially all of our personal property, and the Credit Facility requires us to satisfy certain covenants, including maintaining a minimum amount of liquidity under the Credit Facility.
In addition, the Credit Facility is secured by substantially all of our personal property, and the Credit Facility requires us to satisfy certain covenants, including maintaining certain senior secured leverage and interest coverage ratios under the Credit Facility.
Any termination of our relationship with Salesforce would result in a materially adverse impact on our business model. 14 Table of Contents The Salesforce Agreement expires on June 19, 2027, unless earlier terminated by either party in the event of the other party’s material breach, bankruptcy, change in control in favor of a direct competitor, or intellectual property infringement, and automatically renews for additional one-year periods thereafter unless notice of non-renewal is provided.
Our agreement with Salesforce expires on January 31, 2031, unless earlier terminated by either party in the event of the other party’s material breach, bankruptcy, change in control in favor of a direct competitor, or intellectual property infringement, and automatically renews for additional one-year periods thereafter unless notice of non-renewal is provided.
In the past, FIs have experienced 10 Table of Contents consolidation, distress and failure, including as recently as March 2023 when the FDIC took control of Silicon Valley Bank and Signature Bank due to liquidity concerns and a number of other FIs experienced turbulence and a precipitous decline in market value.
In the past, FIs have experienced consolidation, distress and failure, including in March 2023 when the FDIC took control of Silicon Valley Bank and Signature Bank due to liquidity concerns and a number of other FIs experienced turbulence and a precipitous decline in market value. It is possible these conditions may persist, deteriorate or reoccur.
For the fiscal years ended January 31, 2022 and 2023, sales to customers outside the U.S. accounted for 15.9% and 15.1%, respectively, of our total revenues. Our revenues include the revenues of SimpleNexus from the date of acquisition on January 7, 2022. A key element of our growth strategy is to further expand our international operations and worldwide customer base.
For the fiscal years ended January 31, 2022, 2023, and 2024, sales to customers outside the U.S. accounted for 15.9%, 15.1% and 18.7%, respectively, of our total revenues. Our revenues include the revenues of SimpleNexus from the date of acquisition on January 7, 2022.
If we are unable to attract new customers or continue to broaden our existing customers’ use of our solutions, our revenue growth will be adversely affected. To increase our revenues, we will need to continue to attract new customers and succeed in having our current customers expand the use of our solutions across their institution.
To increase our revenues, we will need to continue to attract new customers and succeed in having our current customers expand the use of our solutions across their institution.
If we are unable to sign new customers or retain or attract new business from current customers, our business and results of operations may be materially and adversely affected. 11 Table of Contents If the market for cloud-based banking technology develops more slowly than we expect or changes in a way that we fail to anticipate, our sales would suffer and our results of operations would be adversely affected.
If the market for cloud-based banking technology develops more slowly than we expect or changes in a way that we fail to anticipate or we fail to market our solutions effectively, our sales would suffer and our results of operations would be adversely affected.
If a court were to find the exclusive-forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could harm our results of operations.
If a court were to find the exclusive-forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could harm our results of operations. 29 Table of Contents General Risks Uncertain or weakened economic conditions, including inflation and rising interest rates and geopolitical uncertainties, may adversely affect our industry, business, and results of operations.
General Risks Uncertain or weakened economic conditions, including inflation and rising interest rates and geopolitical uncertainties, may adversely affect our industry, business, and results of operations. Our overall performance depends on economic conditions, which may be challenging at various times in the future. Financial developments, monetary and other developments seemingly unrelated to us or our industry may adversely affect us.
Our overall performance depends on economic conditions, which may be challenging at various times in the future. Financial developments, monetary and other developments seemingly unrelated to us or our industry may adversely affect us.
These conditions affect the rate of technology spending generally and could adversely affect our customers’ ability or willingness to purchase our solutions, delay prospective customers’ purchasing decisions, reduce the value or duration of their subscriptions, or affect renewal rates, any of which could adversely affect our results of operations. 28 Table of Contents Natural or man-made disasters and other similar events may significantly disrupt our business, and negatively impact our business, financial condition, and results of operations.
These conditions affect the rate of technology spending generally and could adversely affect our customers’ ability or willingness to purchase our solutions, delay prospective customers’ purchasing decisions, reduce the value or duration of their subscriptions, or affect renewal rates, any of which could adversely affect our results of operations.
Our experience in the U.S. may not be relevant to our ability to expand in any international market. Operating in international markets requires significant resources and management attention and subjects us to regulatory, economic, and political risks that are different from those in the U.S.
Operating in international markets requires significant resources and management attention and subjects us to regulatory, economic, and political risks that are different from those in the U.S. Export control regulations in the U.S. may increasingly be implicated in our operations as we expand internationally.
We cannot yet fully determine the impact these or future laws, rules, and regulations may have on our business or operations. Any such laws, rules, and regulations may be inconsistent among different jurisdictions, subject to differing interpretations or may conflict with our current or future practices.
Any such laws, rules, and regulations may be inconsistent among different jurisdictions, subject to differing interpretations or may conflict with our current or future practices.
Accordingly, the effect of significant downturns in sales or market acceptance of our solutions may not be reflected in our results of operations until future periods. The markets in which we participate are intensely competitive and highly fragmented, and pricing pressure, new technologies or other competitive dynamics could adversely affect our business and results of operations.
The markets in which we participate are intensely competitive and highly fragmented, and pricing pressure, new technologies or other competitive dynamics could adversely affect our business and results of operations.
These matters or future litigation against us could adversely affect our operations and prospects, damage our reputation, and be costly and time consuming to defend.
The court dismissed these claims and that decision is currently under appeal. This matter or future litigation against us could adversely affect our operations and prospects, damage our reputation, and be costly and time consuming to defend.
We have expended significant resources to build out our sales and professional services organizations outside of the U.S. and we may not realize a suitable return on this investment in the near future, if at all. We have limited operating experience in international markets, and we cannot assure you that our international expansion efforts will be successful.
A key element of our growth strategy is to further expand our international operations and worldwide customer base. We have expended significant resources to build out our sales and professional services organizations outside of the U.S. and we may not realize a suitable return on this investment in the near future, if at all.
We expect to incur losses on a GAAP basis for the foreseeable future as we continue to invest in product development, and we cannot predict whether or when we will achieve or sustain profitability on a GAAP basis. If we are unable to achieve and sustain profitability, the value of our business and common stock may significantly decrease.
We expect, depending on a number of factors, to continue to incur losses on a GAAP basis as we continue to invest in product development, and we cannot predict whether or when we will achieve or sustain profitability on a GAAP basis.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our headquarters are located in Wilmington, North Carolina where we lease several facilities encompassing approximately 237,000 square feet plus a 648-space parking deck.
Biggest changeItem 2. Properties Our headquarters are located in Wilmington, North Carolina where we lease several facilities encompassing approximately 224,000 square feet plus a 648-space parking deck.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Removed
Legal Proceedings From time to time, the Company may become involved in legal proceedings or is subject to claims arising in the ordinary course of business including the following: On February 23, 2021, the Company and certain of its officers and other employees were served with grand jury subpoenas wherein the Antitrust Division of the Department of Justice (the “DOJ”) was seeking documents and information in connection with an investigation of the Company’s hiring and wage practices under U.S. federal antitrust laws.
Added
Item 3. Legal Proceedings We are currently a party to, and may from time to time in the future be involved in, various litigation matters and subject to claims that arise in the ordinary course of business.
Removed
On February 8, 2023, the DOJ informed the Company that the investigation is closed. No fines, sanctions, actions, or penalties were imposed or taken against the Company or its officers or other employees in connection with this matter, and the costs the Company was incurring cooperating with the investigation have now ceased.
Added
For information regarding legal proceedings, see Note 16 "Commitments and Contingencies" of the notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K, which is incorporated by reference into this Part I, Item 3.
Removed
On March 12, 2021, a putative class action complaint was filed in the United States District Court for the Eastern District of North Carolina (the "District Court"). The sole class representative in the suit is one individual alleging a contract, combination or conspiracy between and among the Company, Live Oak Bancshares, Inc. ("Live Oak") and Apiture, Inc.
Removed
("Apiture") not to solicit or hire each other’s employees in violation of Section 1 of the Sherman Act and N.C. Gen Stat. §§ 30 Table of Contents 75-1 and 75-2. The complaint seeks treble damages and additional remedies, including restitution, disgorgement, reasonable attorneys’ fees, the costs of the suit, and pre-judgment and post judgment interest.
Removed
The complaint does not allege any specific damages. On November 23, 2021, the District Court approved preliminary settlements between the plaintiff and defendant Live Oak in the amount of approximately $3.9 million, and unnamed party Apiture in the amount of approximately $0.8 million.
Removed
Although there can be no assurance with respect to the outcome of this matter, the Company believes the alleged claims are not meritorious and intends to defend itself vigorously.
Removed
On September 26, 2022, a purported stockholder of the Company filed a complaint in the Delaware Court of Chancery in connection with the series of mergers in which the Company became the parent of nCino OpCo and SimpleNexus. The complaint, captioned City of Hialeah Employees’ Retirement System, Derivatively on Behalf of Nominal Defendants nCINO, INC.
Removed
(f/k/a Penny HoldCo, Inc.) and nCINO OpCo, Inc. (f/k/a nCino, Inc.) v. INSIGHT VENTURE PARTNERS, LLC, et al., C.A.
Removed
No. 2022-0846-MTZ, names as defendants, Insight Ventures Partners, LLC., Insight Holdings Group, LLC., the Company’s directors and certain officers, along with nCino, Inc. and nCino OpCo, Inc. as nominal defendants, and alleges that the members of the board of directors, controlling stockholders, and officers violated their fiduciary duties in the course of negotiating and approving the series of mergers.
Removed
The complaint alleges damages in an unspecified amount. Pursuant to the rights in its bylaws and Delaware law, the Company is advancing the costs incurred by the director and officer defendants in this action, and the defendants may assert indemnification rights in respect of an adverse judgment or settlement of the action, if any.
Removed
The Company does not presently believe the above matters will have a material adverse effect on its day-to-day operations or the quality of the services, products or innovation it continues to provide to its customers.
Removed
However, regardless of the outcome, legal proceedings can have an adverse impact on us because of the related expenses, diversion of management resources, and other factors. Given the uncertainty and preliminary stages of these matters, the Company is unable to estimate any possible loss or range of loss that may result.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−1 removed5 unchanged
Biggest changeWe will not include the previously used S&P 500 Index in our stock performance graph going forward. Comparison of Cumulative Total Return of nCino, Inc. Securities Authorized for Issuance under Equity Compensation Plans See Part III, Item 12 “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for more information regarding securities authorized for issuance.
Biggest changeSecurities Authorized for Issuance under Equity Compensation Plans See Part III, Item 12 “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for more information regarding securities authorized for issuance. Unregistered Sales of Equity Securities None. Issuer Purchases of Equity Securities None. Item 6. [Reserved]
The graph below compares the cumulative total return to our stockholders on our common stock between July 14, 2020 (the date our common stock commenced trading on the NASDAQ Global Select Market) through January 31, 2023 in comparison to the S&P 500 Index, the Russell 2000 Index, and the S&P 1500 Application Software Index.
The graph below compares the cumulative total return to our stockholders on our common stock between July 14, 2020 (the date our common stock commenced trading on the Nasdaq Global Select Market) through January 31, 2024 in comparison to the Russell 2000 Index, and the S&P 1500 Application Software Index.
Stockholders As of January 31, 2023, there were 151 holders of record of our common stock. Because many of such shares are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.
Stockholders As of January 31, 2024, there were 141 holders of record of our common stock. Because many of such shares are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.
The graph assumes $100 was invested in our common stock on July 14, 2020, the S&P 500 Index, the Russell 2000 Index, and the S&P 1500 Application Software Index and assumes the reinvestment of any dividends. 32 Table of Contents In fiscal 2023, we replaced the S&P 500 Index with the Russell 2000 Index as we believe that the market capitalization profile is more comparable to that of the Company.
The graph assumes $100 was invested in our common stock on July 14, 2020, the Russell 2000 Index, and the S&P 1500 Application Software Index and assumes the reinvestment of any dividends. 33 Table of Contents Comparison of Cumulative Total Return of nCino, Inc.
Removed
Unregistered Sales of Equity Securities None. Issuer Purchases of Equity Securities None. Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

94 edited+24 added−27 removed88 unchanged
Biggest changeFiscal Year Ended January 31, ($ in thousands, except share and per share amounts) 2021 2022 2023 Revenues: Subscription revenues $ 162,439 $ 224,854 $ 344,752 Professional services and other revenues 41,854 49,011 63,563 Total revenues 204,293 273,865 408,315 Cost of revenues: Cost of subscription revenues 47,969 64,508 106,265 Cost of professional services and other revenues 40,166 46,905 63,341 Total cost of revenues 88,135 111,413 169,606 Gross profit 116,158 162,452 238,709 Operating expenses: Sales and marketing 59,731 82,901 127,669 Research and development 58,263 79,363 121,576 General and administrative 40,772 71,545 83,477 Total operating expenses 158,766 233,809 332,722 Loss from operations (42,608) (71,357) (94,013) Non-operating income (expense): Interest income 361 194 403 Interest expense (130) (1,514) (2,807) Other income (expense), net 1,693 (1,277) (1,356) Loss before income taxes (40,684) (73,954) (97,773) Income tax provision (benefit) 586 (23,833) 4,071 Net loss (41,270) (50,121) (101,844) Net loss attributable to redeemable non-controlling interest (1,130) (1,569) (1,119) Adjustment attributable to redeemable non-controlling interest 396 894 1,995 Net loss attributable to nCino, Inc. $ (40,536) $ (49,446) $ (102,720) Net loss per share attributable to nCino, Inc.: Basic and diluted $ (0.46) $ (0.51) $ (0.93) Weighted average number of common shares outstanding: Basic and diluted 87,678,323 96,722,464 110,615,734 40 Table of Contents The Company recognized stock-based compensation expense as follows: Fiscal Year Ended January 31, ($ in thousands) 2021 2022 2023 Cost of subscription revenues $ 576 $ 960 $ 1,430 Cost of professional services and other revenues 4,232 5,195 7,263 Sales and marketing 6,190 7,520 13,283 Research and development 5,463 6,186 11,602 General and administrative 8,747 8,616 16,654 Total stock-based compensation expense 1 $ 25,208 $ 28,477 $ 50,232 1 Includes $0.2 million benefit incurred for the fiscal year ended January 31, 2023 in connection with the restructuring plan commenced in January 2023.
Biggest changeFiscal Year Ended January 31, ($ in thousands, except share and per share amounts) 2022 1 2023 2024 Revenues: Subscription revenues $ 224,854 $ 344,752 $ 409,479 Professional services and other revenues 49,011 63,563 67,064 Total revenues 273,865 408,315 476,543 Cost of revenues: Cost of subscription revenues 64,508 106,265 120,861 Cost of professional services and other revenues 46,905 63,341 70,609 Total cost of revenues 111,413 169,606 191,470 Gross profit 162,452 238,709 285,073 Operating expenses: Sales and marketing 82,901 127,669 130,547 Research and development 79,363 121,576 117,311 General and administrative 71,545 83,477 76,727 Total operating expenses 233,809 332,722 324,585 Loss from operations (71,357) (94,013) (39,512) Non-operating income (expense): Interest income 194 403 2,567 Interest expense (1,514) (2,807) (4,135) Other expense, net (1,277) (1,356) (856) Loss before income taxes (73,954) (97,773) (41,936) Income tax provision (benefit) (23,833) 4,071 1,590 Net loss (50,121) (101,844) (43,526) Net loss attributable to redeemable non-controlling interest (1,569) (1,119) (1,109) Adjustment attributable to redeemable non-controlling interest 894 1,995 (71) Net loss attributable to nCino, Inc. $ (49,446) $ (102,720) $ (42,346) Net loss per share attributable to nCino, Inc.: Basic and diluted $ (0.51) $ (0.93) $ (0.38) Weighted average number of common shares outstanding: Basic and diluted 96,722,464 110,615,734 112,672,397 1 Includes the operating results of SimpleNexus from the Acquisition Date, see Note 7 "Business Combinations" of the notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information. 41 Table of Contents The Company recognized stock-based compensation expense as follows: Fiscal Year Ended January 31, ($ in thousands) 2022 2023 2024 Cost of subscription revenues $ 960 $ 1,430 $ 1,847 Cost of professional services and other revenues 5,195 7,263 9,369 Sales and marketing 7,520 13,283 15,417 Research and development 6,186 11,602 15,942 General and administrative 8,616 16,654 15,460 Total stock-based compensation expense 1 $ 28,477 $ 50,232 $ 58,035 1 Includes $0.2 million benefit incurred for the fiscal year ended January 31, 2023 in connection with the restructuring plan commenced in January 2023.
The initial deployment of our solutions by our customers requires a period of implementation and configuration services that typically range from three to 18 months, depending on scope.
The initial deployment of our solutions by our customers requires a period of implementation and configuration services that typically range from three months to 18 months, depending on the scope.
Non-Operating Income (Expense) Interest Income. Interest income consists primarily of interest earned on our cash and cash equivalents. Interest Expense. Interest expense consists primarily of interest related to our financing obligations along with interest expense on borrowings, commitment fees, and amortization of debt issuance costs associated with our secured revolving credit facility. Other Income (Expense), Net.
Non-Operating Income (Expense) Interest Income. Interest income consists primarily of interest earned on our cash and cash equivalents. Interest Expense. Interest expense consists primarily of interest related to our financing obligations along with interest expense on borrowings, commitment fees, and amortization of debt issuance costs associated with our secured revolving credit facility. Other Expense, Net.
Other income (expense), net consists primarily of foreign currency gains and losses, the majority of which is due to intercompany loans that are denominated in currencies other than the underlying functional currency of the applicable entity. Income Tax Provision (Benefit).
Other expense, net consists primarily of foreign currency gains and losses, the majority of which is due to intercompany loans that are denominated in currencies other than the underlying functional currency of the applicable entity. Income Tax Provision (Benefit).
The cash provided by financing activities was partially reduced by payments of $20.0 million on the Credit Facility, principal payments of $1.1 million on financing obligations, and payments of debt issuance costs of $0.4 million.
The cash provided by financing activities was partially reduced by payments of $20.0 million on the Credit Facility, principal payments of $1.1 million on the financing obligations, and payments of debt issuance costs of $0.4 million.
Non-GAAP operating loss eliminates potential differences in performance caused by these items that are not indicative of the Company's ongoing operating performance and hinders comparability with prior and future performance.
Non-GAAP operating income (loss) eliminates potential differences in performance caused by these items that are not indicative of the Company's ongoing operating performance and hinders comparability with prior and future performance.
See Note 19 "Restructuring" of the notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for more information on the charges related to the Restructuring Plan. Non-GAAP operating loss is widely used by securities analysts, investors, and other interested parties to evaluate the profitability of companies.
See Note 19 "Restructuring" of the notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for more information on the charges related to the restructuring. Non-GAAP operating income (loss) is widely used by securities analysts, investors, and other interested parties to evaluate the profitability of companies.
The cost of professional services revenues has increased in absolute dollars as we have added new customer subscriptions that require professional services and built-out our international professional services capabilities. Realized effective billing and utilization rates drive fluctuations in our professional services and other gross margin on a period-to-period basis. 38 Table of Contents Operating Expenses Sales and Marketing.
The cost of professional services revenues has increased in absolute dollars as we have added new customer subscriptions that require professional services and built-out our international professional services capabilities. Realized effective billing and utilization rates drive fluctuations in our professional services and other gross margin on a period-to-period basis. 39 Table of Contents Operating Expenses Sales and Marketing.
Net Cash Provided by Financing Activities The $36.7 million provided by financing activities in fiscal 2023 was comprised principally of $50.0 million of proceeds from borrowings on the Credit Facility to expand our liquidity, $4.5 million in proceeds from stock issuances under the employee stock purchase plan, and $3.8 million of proceeds from the exercise of stock options.
The $36.7 million provided by financing activities in fiscal 2023 was comprised principally of $50.0 million of proceeds from borrowings on the Credit Facility to expand our liquidity, $4.5 million in proceeds from stock issuances under the employee stock purchase plan, and $3.8 million of proceeds from the exercise of stock options.
Income tax provision (benefit) consists of federal and state income taxes in the U.S. and income taxes in foreign jurisdictions. 39 Table of Contents Results of Operations The results of operations presented below should be reviewed in conjunction with the financial statements and notes included elsewhere in this Annual Report on Form 10-K.
Income tax provision (benefit) consists of federal and state income taxes in the U.S. and income taxes in foreign jurisdictions. 40 Table of Contents Results of Operations The results of operations presented below should be reviewed in conjunction with the financial statements and notes included elsewhere in this Annual Report on Form 10-K.
Generally, our subscription contracts for the nCino Bank Operating System are three years or longer in length, billed annually in advance, are non-cancelable, and do not contain refund-type provisions. Subscription contracts for SimpleNexus typically range from one to three years and are generally billed monthly in advance.
Generally, our subscription contracts for the nCino Bank Operating System are three years or longer in length, billed annually in advance, are non-cancelable, and do not contain refund-type provisions. Subscription contracts for nCino Mortgage typically range from one to three years and are generally billed monthly in advance.
Specifically, we offer: • Client onboarding, loan origination, and deposit account opening applications targeted at a FI’s commercial, small business, and retail lines of business, for which we generally charge on a per seat basis. • nIQ for which we generally charge based on the asset size of the customer or on a usage basis. • Through SimpleNexus, a digital homeownership platform uniting people, systems, and stages of the mortgage process into a seamless end-to-end journey for which we generally charge on a per seat basis. • Maintenance and support services as well as internal-use or “sandbox” development licenses, for which we generally charge as a percentage of the related subscription fees.
Specifically, we offer: • Client onboarding, loan origination, and deposit account opening applications targeted at a FI’s commercial, small business, and retail lines of business, for which we generally charge on a per seat basis. • nIQ for which we generally charge based on the asset size of the customer or on a usage basis. • Through nCino Mortgage, a digital homeownership solution uniting people, systems, and stages of the mortgage process into a seamless end-to-end journey for which we generally charge on a per seat basis. • Maintenance and support services as well as internal-use or “sandbox” development licenses, for which we generally charge as a percentage of the related subscription fees.
Where seats are activated in stages, we charge subscription fees from the date of activation through the anniversary of the initial activation date, and annually thereafter. Subscription fees associated with the nCino Bank Operating System are generally billed annually in advance while subscription fees for SimpleNexus are generally billed monthly in advance.
Where seats are activated in stages, we charge subscription fees from the date of activation through the anniversary of the initial activation date, and annually thereafter. Subscription fees associated with the nCino Bank Operating System are generally billed annually in advance while subscription fees for nCino Mortgage are generally billed monthly in advance.
Cash used in working capital accounts was principally a function of a $26.8 million increase in accounts receivable due to the timing of billings and collections from customers, an increase of $12.2 million of capitalized costs to obtain revenue contracts, which primarily relates to payments for sales commissions as we expand our customer base, a decrease of $4.8 million in operating lease liabilities, a $3.4 million increase in prepaid expenses and other assets, and a $1.2 million decrease in accrued expenses and other current liabilities.
Cash used in working capital accounts was principally a function of a $26.8 million increase in accounts receivable due to the timing of billings and collections from customers, an increase of $12.2 million of capitalized costs to obtain revenue contracts, which primarily related to payments for sales commissions as we expanded our customer base, a decrease of $4.8 million in operating lease liabilities, a $3.4 million increase in prepaid expenses and other assets, and a $1.2 million decrease in accrued expenses and other current liabilities.
This non-GAAP financial measure is non-GAAP operating loss, as discussed below. Non-GAAP operating loss. Non-GAAP operating loss is defined as loss from operations as reported in our consolidated statements of operations excluding the impact of amortization of intangible assets, stock-based compensation expense, acquisition-related expenses, legal expenses related to certain litigation, and restructuring and related charges, resulting from the Restructuring Plan.
This non-GAAP financial measure is non-GAAP operating income (loss), as discussed below. Non-GAAP operating income (loss). Non-GAAP operating income (loss) is defined as loss from operations as reported in our consolidated statements of operations excluding the impact of amortization of intangible assets, stock-based compensation expense, acquisition-related expenses, legal expenses related to certain litigation, and restructuring and related charges.
While professional services revenues will fluctuate as a percentage of total revenues in the future and tend to be higher in periods of faster growth, over time we expect subscription revenues will make up an increasing proportion of our total revenues as our overall business grows. 35 Table of Contents Subscription Revenue Retention Rate .
While professional services revenues will fluctuate as a percentage of total revenues in the future and tend to be higher in periods of faster growth, over time we expect subscription revenues will make up an increasing proportion of our total revenues as our overall business grows. Subscription Revenue Retention Rate .
We have historically delivered professional services ourselves for community banks and smaller credit unions and SimpleNexus has historically provided professional services directly to its customers. Revenues for implementation, training, and advisory services are generally recognized on a proportional performance basis, based on labor hours incurred relative to total budgeted hours.
We have historically delivered professional services ourselves for community banks and smaller credit unions and nCino Mortgage has historically provided professional services directly to its customers. Revenues for implementation, training, and advisory services are generally recognized on a proportional performance basis, based on labor hours incurred relative to total budgeted hours.
The decrease in our professional services and other gross margin for fiscal 2023 was primarily due to a decline in realized effective billing and utilization rates in our professional services teams.
The decrease in our professional services and other gross margin for fiscal 2024 was primarily due to a decline in realized effective billing and utilization rates in our professional services teams.
Pursuant to an agreement with the holders of the non-controlling interest in nCino K.K., beginning in 2027 we may redeem the non-controlling interest, or be required to redeem such interest by the holders thereof, based on a prescribed formula derived from the relative revenues of nCino K.K. and the Company.
Pursuant to an agreement with the holders of the non-controlling interest in nCino 47 Table of Contents K.K., beginning in 2027 we may redeem the non-controlling interest, or be required to redeem such interest by the holders thereof, based on a prescribed formula derived from the relative revenues of nCino K.K. and the Company.
The increase in our subscription revenue retention rate for fiscal 2023 was due to the inclusion of customers who had contracts with SimpleNexus in effect prior to January 31, 2022. Subscription revenues from periods prior to the acquisition were excluded from the calculation for fiscal 2023. Excluding SimpleNexus, the subscription revenue retention rate for fiscal 2023 was 125%.
The increase in our subscription revenue retention rate for fiscal 2023 was due to the inclusion of customers who had contracts with nCino Mortgage in effect prior to January 31, 2022. Subscription revenues from periods prior to the acquisition were excluded from the calculation for fiscal 2023. Excluding nCino Mortgage, the subscription revenue retention rate for fiscal 2023 was 125%.
Our subscription revenues consist principally of fees from customers for accessing our solutions and maintenance and support services that we generally offer under non-cancellable multi-year contracts, which 37 Table of Contents typically range from three to five years for the nCino Bank Operating System and one to three years for SimpleNexus.
Our subscription revenues consist principally of fees from customers for accessing our solutions and maintenance and support services that we generally offer under non-cancellable multi-year contracts, which 38 Table of Contents typically range from three to five years for the nCino Bank Operating System and one to three years for nCino Mortgage.
For fiscal 2021, 2022, and 2023, we had subscription revenue retention rates of 155%, 133%, and 148%, respectively. The most significant driver of changes in our subscription revenue retention rate each year has historically been the number of new customers in prior years and the associated phased activation schedules for such customers.
For fiscal 2022, 2023, and 2024, we had subscription revenue retention rates of 133%, 148%, and 117%, respectively. The most significant driver of changes in our subscription revenue retention rate each year has historically been the number of new customers in prior years and the associated phased activation schedules for such customers.
We calculate our subscription revenue retention rate as total subscription revenues in a fiscal year from customers who contracted for any of our solutions as of January 31 of the prior fiscal year, expressed as a percentage of total subscription revenues for the prior fiscal year.
We calculate our subscription revenue retention rate as total subscription revenues in a fiscal year from customers who contracted for any of our solutions as of January 31 of the prior fiscal year, expressed as a 36 Table of Contents percentage of total subscription revenues for the prior fiscal year.
Net Cash Used in Investing Activities The $20.7 million used in investing activities in fiscal 2023 was comprised of $18.3 million used for the purchase of property and equipment and the completion of leasehold improvements to our additional headquarter building to support the expansion of our business, $2.5 million for the purchase of preferred stock in Zest AI, and $0.6 million for an asset acquisition completed in August 2022.
The $20.7 million used in investing activities in fiscal 2023 was comprised of $18.3 million used for the purchase of property and equipment and the completion of leasehold improvements to our additional headquarter building to support the expansion of our business, $2.5 million used for the purchase of preferred stock in Zest AI, and $0.6 million for 48 Table of Contents an asset acquisition completed in August 2022.
In addition, growing our customer base will require us to increasingly penetrate markets outside the U.S., which accounted for 15.1% of total revenues for fiscal 2023. For new customers, our sales cycles are typically lengthy, generally ranging from six to nine months for smaller FIs to 12 to 18 months or more for larger FIs.
In addition, growing our customer base will require us to increasingly penetrate markets outside the U.S., which accounted for 18.7% of total revenues for fiscal 2024. For new customers, our sales cycles are typically lengthy, generally ranging from six to nine months for smaller FIs to 12 to 18 months or more for larger FIs.
The nCino Bank Operating System is designed to scale with our customers, and once our solution is deployed, we seek to have our customers expand adoption within and across lines of business. For fiscal 2023, we had a subscription revenue retention rate of 148%.
The nCino Bank Operating System is designed to scale with our customers, and once our solution is deployed, we seek to have our customers expand adoption within and across lines of business. For fiscal 2024, we had a subscription revenue retention rate of 117%.
Discussions of fiscal 2021 items and year-to-year comparisons between fiscal 2022 and fiscal 2021 that are not included in this Form 10-K can be found in Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended January 31, 2022, filed with the SEC on March 31, 2022.
Discussions of fiscal 2022 items and year-to-year comparisons between fiscal 2023 and fiscal 2022 that are not included in this Form 10-K can be found in Part II, Item 7, 34 Table of Contents “Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended January 31, 2023, filed with the SEC on March 28, 2023.
See Note 15 "Revolving Credit Facility" of the notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for more information.
See Note 15 "Revolving Credit Facility" and Note 20 "Subsequent Events" of the notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for more information.
Our subscription-based revenues include $3.7 million from SimpleNexus from the Acquisition Date for fiscal 2022 and $59.8 million for fiscal 2023. Due to our investments in growth, we recorded net losses attributable to nCino in fiscal 2021, 2022, and 2023 of $40.5 million, $49.4 million, and $102.7 million, respectively.
Our subscription-based revenues include $3.7 million from SimpleNexus from the Acquisition Date for fiscal 2022 and $59.8 million for fiscal 2023. Due to our investments in growth, we recorded net losses attributable to nCino in fiscal 2022, 2023, and 2024 of $49.4 million, $102.7 million, and $42.3 million, respectively.
Cash Flows Summary Cash Flow information for fiscal 2021, 2022, and 2023 are set forth below.
Cash Flows Summary Cash Flow information for fiscal 2022, 2023, and 2024 are set forth below.
The cash used in investing activities was partially offset by $0.7 million received for a net working 47 Table of Contents capital adjustment from our SimpleNexus acquisition.
The cash used in investing activities was partially offset by $0.7 million received for a net working capital adjustment from our SimpleNexus acquisition.
See Note 19 "Restructuring" of the notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information. Our total revenues were $204.3 million, $273.9 million, and $408.3 million for fiscal 2021, 2022, and 2023, respectively, representing a 41.4% compound annual growth rate.
See Note 19 "Restructuring" of the notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information. Our total revenues were $273.9 million, $408.3 million, and $476.5 million for fiscal 2022, 2023, and 2024, respectively, representing a 31.9% compound annual growth rate.
Costs related to Salesforce user fees increased $11.9 million as we continued to add new customers and sell additional functionality to existing customers, and other costs of subscription revenues increased $10.1 million due to costs associated with access to other platforms and data center costs.
Costs related to Salesforce user fees increased $10.4 million as we continued to add new customers and sell additional functionality to existing customers, and other costs of subscription revenues increased $2.5 million due to costs associated with access to other platforms and data center costs.
Our fiscal year ends on January 31 of each year and references in this Annual Report on Form 10-K to a fiscal year mean the year in which that fiscal year ends.
Our fiscal year ends on January 31 of each year and references in this Annual Report on Form 10-K to a fiscal year mean the year in which that fiscal year ends. For example, references in this Annual Report on Form 10-K to "fiscal 2024" refer to the fiscal year ended January 31, 2024.
Customers who signed with SimpleNexus prior to January 31, 2022, are included in the fiscal 2022 cohort and customers who 36 Table of Contents signed with Portfolio Analytics prior to January 31, 2020, are represented in the fiscal 2020 cohort. Each individual cohort is not necessarily predictive of other or future cohorts. Annual Contract Value ("ACV") Interest Rate Environment.
Customers who signed with nCino Mortgage prior to January 31, 2022, are included in the fiscal 2022 cohort and customers 37 Table of Contents who signed with Portfolio Analytics prior to January 31, 2020, are represented in the fiscal 2020 cohort. Each individual cohort is not necessarily predictive of other or future cohorts. Annual Contract Value ("ACV") Macroeconomic Environment.
Of the increase, 44.5% was attributable to increased revenues from existing customers as additional seats were activated in accordance with contractual terms and customers expanded their adoption of our solutions, 8.7% was attributable to initial revenues from customers who did not contribute to subscription revenues during the prior period, and 46.8% was attributable to revenues from SimpleNexus.
Of the increase, 86.2% was attributable to increased revenues from existing customers as additional seats were activated in accordance with contractual terms and customers expanded their adoption of our solutions, and 13.8% was attributable to initial revenues from customers who did not contribute to subscription revenues during the prior period.
We expect sales and marketing expenses will decrease as a percentage of revenues as we leverage the investments we have made to date.
We expect research and development expenses will decrease as a percentage of revenues as we leverage the investments we have made to date.
In addition, other companies may use other measures to evaluate their performance, or may calculate non-GAAP measures differently, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. 45 Table of Contents The following table reconciles non-GAAP operating loss to loss from operations, the most directly comparable financial measure, calculated and presented in accordance with GAAP (in thousands): Fiscal Year Ended January 31, ($ in thousands) 2021 2022 2023 GAAP loss from operations $ (42,608) $ (71,357) $ (94,013) Adjustments Amortization of intangible assets 3,205 4,907 28,200 Stock-based compensation expense 25,208 28,477 50,232 Acquisition-related expenses — 10,006 2,276 Litigation expenses 1 — 10,326 6,147 Restructuring and related charges 2 — — 5,017 Total adjustments 28,413 53,716 91,872 Non-GAAP operating loss $ (14,195) $ (17,641) $ (2,141) 1 Represents legal expenses related to the Antitrust Matters and a shareholder derivative lawsuit. 2 Stock-based compensation benefit of $0.2 million related to restructuring is included on the stock-based compensation expense line item.
In addition, other companies may use other measures to evaluate their performance, or may calculate non-GAAP measures differently, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. 46 Table of Contents The following table reconciles non-GAAP operating income (loss) to loss from operations, the most directly comparable financial measure, calculated and presented in accordance with GAAP (in thousands): Fiscal Year Ended January 31, ($ in thousands) 2022 2023 2024 GAAP loss from operations $ (71,357) $ (94,013) $ (39,512) Adjustments Amortization of intangible assets 4,907 28,200 37,226 Stock-based compensation expense 28,477 50,232 58,035 Acquisition-related expenses 10,006 2,276 878 Litigation expenses 1 10,326 6,147 4,525 Restructuring and related charges 2 — 5,017 627 Total adjustments 53,716 91,872 101,291 Non-GAAP operating income (loss) $ (17,641) $ (2,141) $ 61,779 1 Represents legal expenses related to the Antitrust Matters and a shareholder derivative lawsuit. 2 Stock-based compensation benefit of $0.2 million related to restructuring is included on the stock-based compensation expense line item for the fiscal year ended January 31, 2023.
Throughout this market expansion, we broadened the nCino Bank Operating System by adding functionality for consumer lending, client onboarding, deposit account opening, analytics and AI/ML.
Throughout this market expansion, we broadened the nCino Bank Operating System by adding functionality for consumer lending, client onboarding, deposit account opening, analytics and artificial intelligence and machine learning.
Liquidity and Capital Resources As of January 31, 2023, we had $82.0 million in cash and cash equivalents, and an accumulated deficit of $310.3 million. Our net losses have been driven by our investments in developing the nCino Bank Operating System, expanding our sales and marketing organization, and scaling our finance and administrative functions to support our rapid growth.
Liquidity and Capital Resources As of January 31, 2024, we had $112.1 million in cash and cash equivalents, and an accumulated deficit of $352.8 million. Our net losses have been driven by our investments in developing the nCino Bank Operating System and scaling our sales and marketing organization and finance and administrative functions to support our rapid growth.
This will result in the repartition of our deferred tax asset balances from net operating losses and tax credit carryforwards to non-tax attribute 44 Table of Contents deferred tax balances. In addition, this may reduce our operating cash flows in future periods through cash remittances of U.S. federal and state income tax.
This will result in the repartition of our deferred tax asset balances from net operating losses and tax credit carryforwards to non-tax attribute deferred tax balances. In addition, this may reduce our operating cash flows in future periods through cash remittances of U.S. federal and state income tax. We expect these changes to continue to impact our cash tax liability.
At January 31, 2023, we determined that it is more likely than not that the majority of our deferred tax assets will not be realized and as such, recorded a valuation allowance of $138.4 million against our deferred tax assets of $192.4 million as of that date.
At January 31, 2024, we determined that it is more likely than not that the majority of our deferred tax assets will not be realized and as such, recorded a valuation allowance of $148.3 million against our deferred tax assets of $201.9 million as of that date.
Non-cash charges primarily consisted of stock-based compensation, deferred income taxes, depreciation and amortization, amortization of costs capitalized to obtain revenue contracts, non-cash operating lease costs, and foreign currency losses related to intercompany loans and transactions.
Non-cash charges primarily consisted of stock-based compensation, depreciation and amortization, amortization of costs capitalized to obtain revenue contracts, non-cash operating lease costs, deferred income taxes, provision for bad debt, foreign currency losses related to intercompany loans and transactions, and an unrealized gain on investment.
With nCino, FIs can: • digitally serve their clients across lines of business, • improve financial results, • elevate employee experience and performance, • manage risk and compliance more effectively, and • establish an active data, audit, and business intelligence hub. nCino was originally founded in a bank to improve that FI’s operations and client service.
With the nCino Bank Operating System, FIs can: • digitally serve their clients across lines of business, • improve efficiency, • elevate employee experience and performance, • manage risk and compliance more effectively, • establish an active data, audit, and business intelligence hub, and • embrace the value of intelligent automation and uncover data-driven insights. nCino was originally founded in a bank to improve that FI’s operations and client service.
We initially focused the nCino Bank Operating System on transforming commercial and small business lending for community and regional banks in the United States ("U.S."). We introduced this solution to enterprise banks in the U.S. in 2014, and then internationally in 2017, and have subsequently expanded across North America, Europe and Asia-Pacific ("APAC").
The nCino Bank Operating System was initially designed to help transform commercial and small business lending for community and regional banks. This solution was introduced to enterprise banks in the United States ("U.S.") in 2014, and then internationally in 2017, and has subsequently expanded across North America, Europe, the Middle East, and Asia-Pacific ("APAC").
Our subscription revenues in fiscal 2021 were $162.4 million or 79.5% of total revenues, $224.9 million or 82.1% of total revenues in fiscal 2022, and $344.8 million or 84.4% of total revenues in fiscal 2023, representing a 45.7% compound annual growth rate.
Our subscription revenues in fiscal 2022 were $224.9 million or 82.1% of total revenues, $344.8 million or 84.4% of total revenues in fiscal 2023, and $409.5 million or 85.9% of total revenues in fiscal 2024, representing a 34.9% compound annual growth rate.
Income Tax Provision (Benefit) Fiscal Year Ended January 31, ($ in thousands) 2022 2023 Income tax provision (benefit) $ (23,833) (8.7) % $ 4,071 1.0 % Income tax provision was $4.1 million for fiscal 2023 compared to a benefit of $23.8 million for fiscal 2022 and resulted in an effective tax rate of (4.2)% compared to 32.2% in the prior fiscal year.
Income Tax Provision Fiscal Year Ended January 31, ($ in thousands) 2023 2024 Income tax provision $ 4,071 1.0 % $ 1,590 0.3 % Income tax provision was $1.6 million for fiscal 2024 compared to a provision of $4.1 million for fiscal 2023 and resulted in an effective tax rate of (3.8)% compared to (4.2)% in the prior fiscal year.
After realizing that virtually all FIs were dealing with the same problems—cumbersome legacy technology, fragmented data, disconnected business functions, and a disengaged workforce made it difficult to maintain relevancy in their clients’ lives—we were spun out as a separate company in late 2011.
After realizing that the same problems—cumbersome legacy technology, fragmented data, disconnected business functions, and a disengaged workforce made it difficult to maintain relevancy in their clients' lives—were endemic across the financial services industry, nCino spun out as a separate company in late 2011.
Third party professional fees decreased $10.6 million for fiscal 2023 compared to fiscal 2022, mostly attributable to a decrease in third party professional fees and expenses related to acquisition costs for SimpleNexus and fees and expenses related to the government antitrust investigation and related civil action disclosed in Item 3 "Legal Proceedings" of Part I of this Annual Report on Form 10-K (the "Antitrust Matters") partially offset by an increase in other professional fees.
General and Administrative General and administrative expenses decreased $6.8 million for fiscal 2024 compared to fiscal 2023, primarily due to a decrease of $3.5 million in third party professional fees, mostly attributable to decreases related to acquisition costs for SimpleNexus and fees and expenses related to other litigation expenses including a dismissed government antitrust investigation and related civil action (the "Antitrust Matters"), partially offset by the proposed settlement agreement for the related civil action of approximately $2.2 million, disclosed in Item 3 "Legal Proceedings" of Part I of this Annual Report on Form 10-K, and an increase in other professional fees.
The Company recognized amortization expense for intangible assets as follows: Fiscal Year Ended January 31, ($ in thousands) 2021 2022 2023 Cost of subscription revenues $ 1,525 $ 2,604 $ 17,019 Cost of professional services and other revenues — — 94 Sales and marketing 1,670 2,303 11,087 General and administrative 10 — — Total amortization expense $ 3,205 $ 4,907 $ 28,200 Fiscal Year Ended January 31, 2021 2022 2023 Revenues: Subscription revenues 79.5 % 82.1 % 84.4 % Professional services and other revenues 20.5 17.9 15.6 Total revenues 100.0 100.0 100.0 Cost of revenues (percentage shown in comparison to related revenues): Cost of subscription revenues 29.5 28.7 30.8 Cost of professional services and other revenues 96.0 95.7 99.7 Total cost of revenues 43.1 40.7 41.5 Gross profit 56.9 59.3 58.5 Operating expenses: Sales and marketing 29.2 30.3 31.3 Research and development 28.5 29.0 29.8 General and administrative 20.0 26.1 20.4 Total operating expenses 77.7 85.4 81.5 Loss from operations (20.8) (26.1) (23.0) Non-operating income (expense): Interest income 0.2 0.1 0.1 Interest expense (0.1) (0.6) (0.7) Other income (expense), net 0.8 (0.5) (0.3) Loss before income taxes (19.9) (27.1) (23.9) Income tax provision (benefit) 0.3 (8.7) 1.0 Net loss (20.2) % (18.4) % (24.9) % 41 Table of Contents Comparison of the Fiscal Years Ended January 31, 2022 and 2023 Revenues Fiscal Year Ended January 31, ($ in thousands) 2022 2023 Revenues: Subscription revenues $ 224,854 82.1 % $ 344,752 84.4 % Professional services and other revenues 49,011 17.9 63,563 15.6 Total revenues $ 273,865 100.0 % $ 408,315 100.0 % Subscription Revenues Subscription revenues increased $119.9 million for fiscal 2023 compared to fiscal 2022, due to initial revenues from customers who did not contribute to subscription revenues during the prior period, including customers added as a result of our acquisition of SimpleNexus, and growth from existing customers within and across lines of business.
The Company recognized amortization expense for intangible assets as follows: Fiscal Year Ended January 31, ($ in thousands) 2022 2023 2024 Cost of subscription revenues $ 2,604 $ 17,019 $ 16,306 Cost of professional services and other revenues — 94 330 Sales and marketing 2,303 11,087 20,590 Total amortization expense $ 4,907 $ 28,200 $ 37,226 Fiscal Year Ended January 31, 2022 2023 2024 Revenues: Subscription revenues 82.1 % 84.4 % 85.9 % Professional services and other revenues 17.9 15.6 14.1 Total revenues 100.0 100.0 100.0 Cost of revenues (percentage shown in comparison to related revenues): Cost of subscription revenues 28.7 30.8 29.5 Cost of professional services and other revenues 95.7 99.7 105.3 Total cost of revenues 40.7 41.5 40.2 Gross profit 59.3 58.5 59.8 Operating expenses: Sales and marketing 30.3 31.3 27.4 Research and development 29.0 29.8 24.6 General and administrative 26.1 20.4 16.1 Total operating expenses 85.4 81.5 68.1 Loss from operations (26.1) (23.0) (8.3) Non-operating income (expense): Interest income 0.1 0.1 0.5 Interest expense (0.6) (0.7) (0.9) Other expense, net (0.5) (0.3) (0.2) Loss before income taxes (27.1) (23.9) (8.9) Income tax provision (benefit) (8.7) 1.0 0.3 Net loss (18.4) % (24.9) % (9.2) % 42 Table of Contents Comparison of the Fiscal Years Ended January 31, 2023 and 2024 Revenues Fiscal Year Ended January 31, ($ in thousands) 2023 2024 Revenues: Subscription revenues $ 344,752 84.4 % $ 409,479 85.9 % Professional services and other revenues 63,563 15.6 67,064 14.1 Total revenues $ 408,315 100.0 % $ 476,543 100.0 % Subscription Revenues Subscription revenues increased $64.7 million for fiscal 2024 compared to fiscal 2023, due to initial revenues from customers who did not contribute to subscription revenues during the prior period and growth from existing customers within and across lines of business.
On January 18, 2023, the Company announced a workforce reduction of approximately seven percent 7% and office space reductions in certain markets (collectively, the “Restructuring Plan”) in furtherance of its efforts to improve operating margins and advance the Company’s objective of profitable growth.
We expect enterprise FIs to make up a greater proportion of our nCino Bank Operating System sales. On January 18, 2023, the Company announced a workforce reduction of approximately seven percent 7% and office space reductions in certain markets (collectively, the “Restructuring Plan”) in furtherance of its efforts to improve operating margins and advance the Company’s objective of profitable growth.
Professional Services and Other Revenues Professional services and other revenues increased $14.6 million for fiscal 2023 compared to fiscal 2022, primarily due to the addition of new customers as well as expanded adoption by existing customers within and across lines of business where implementation, configuration, and training services were required. 36.4% of the increase was attributable to revenues from SimpleNexus.
Professional Services and Other Revenues Professional services and other revenues increased $3.5 million for fiscal 2024 compared to fiscal 2023, primarily due to the addition of new customers as well as expanded adoption by existing customers within and across lines of business where implementation, configuration, and training services were required.
The following tables present our selected consolidated statements of operations data for fiscal 2021, 2022, and 2023 in both dollars and as a percentage of total revenues, except as noted. The comparability of our operating results is impacted by our SimpleNexus acquisition.
The following tables present our selected consolidated statements of operations data for fiscal 2022, 2023, and 2024 in both dollars and as a percentage of total revenues, except as noted.
These rate increases have had an impact on the real estate market in the U.S. and specifically, the demand for mortgages and mortgage-related products and services, which has had a negative impact on our SimpleNexus business. We continue to monitor the impact the rise in interest rates and any future rise in interest rates may have on our business.
These rate increases have had an impact on the real estate market in the U.S. and specifically, the demand for mortgages and mortgage-related products and services, which has had a negative impact on our nCino Mortgage business. We will continue to monitor the impact the macroeconomic environment may have on our business. Continued Investment in Innovation and Growth .
As of January 31, 2022 and January 31, 2023, the redeemable non-controlling interest was $2.9 million and $3.6 million, respectively. As part of our joint venture obligations, we may be required to make an additional cash capital contribution of up to $5.0 million to nCino K.K. during fiscal 2024.
As of January 31, 2023 and January 31, 2024, the redeemable non-controlling interest was $3.6 million and $3.4 million, respectively. As part of our joint venture obligations, we made an additional cash capital contribution of $1.0 million to nCino K.K. during the third quarter of fiscal 2024.
Subscription revenues were 84.4% of total revenues for fiscal 2023 compared to 82.1% of total revenues for fiscal 2022, primarily due to growth in our installed base and SimpleNexus.
Subscription revenues were 85.9% of total revenues for fiscal 2024 compared to 84.4% of total revenues for fiscal 2023, primarily due to growth in our installed base.
Comparison of the Fiscal Years Ended January 31, 2021 and 2022 For a discussion of our results of operations for the fiscal year ended January 31, 2022 compared to the fiscal year ended January 31, 2021, please refer to Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended January 31, 2022, filed with the SEC on March 31, 2022.
The company will continue to monitor and reflect the impact of such legislative changes in future financial statements as appropriate. 45 Table of Contents Comparison of the Fiscal Years Ended January 31, 2022 and 2023 For a discussion of our results of operations for the fiscal year ended January 31, 2023 compared to the fiscal year ended January 31, 2022, please refer to Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended January 31, 2023, filed with the SEC on March 28, 2023.
Fiscal Year Ended January 31, ($ in thousands) 2021 2022 2023 Net cash provided by (used in) operating activities $ 9,222 $ (19,229) $ (15,381) Net cash used in investing activities (4,338) (278,488) (20,725) Net cash provided by financing activities 274,121 15,922 36,712 Net Cash Used in Operating Activities The $15.4 million used in operating activities in fiscal 2023 reflects our net loss of $101.8 million and $14.9 million used in changes in working capital accounts, partially offset by $101.3 million in non-cash charges.
Fiscal Year Ended January 31, ($ in thousands) 2022 2023 2024 Net cash provided by (used in) operating activities $ (19,229) $ (15,381) $ 57,285 Net cash used in investing activities (278,488) (20,725) (6,328) Net cash provided by (used in) financing activities 15,922 36,712 (21,113) Net Cash Provided by (Used in) Operating Activities The $57.3 million provided by operating activities in fiscal 2024 reflects our net loss of $43.5 million and $16.4 million used in changes in working capital accounts, offset by $117.2 million in non-cash charges.
Cost of Revenues and Gross Margin Fiscal Year Ended January 31, ($ in thousands) 2022 2023 Cost of revenues (percentage shown in comparison to related revenues): Cost of subscription revenues $ 64,508 28.7 % $ 106,265 30.8 % Cost of professional services and other revenues 46,905 95.7 63,341 99.7 Total cost of revenues $ 111,413 40.7 $ 169,606 41.5 Gross profit $ 162,452 59.3 % $ 238,709 58.5 % Cost of Subscription Revenues Cost of subscription revenues increased $41.8 million for fiscal 2023 compared to fiscal 2022, generating a gross margin for subscription revenues of 69.2% compared to a gross margin of 71.3% for fiscal 2022.
Cost of Revenues and Gross Margin Fiscal Year Ended January 31, ($ in thousands) 2023 2024 Cost of revenues (percentage shown in comparison to related revenues): Cost of subscription revenues $ 106,265 30.8 % $ 120,861 29.5 % Cost of professional services and other revenues 63,341 99.7 70,609 105.3 Total cost of revenues $ 169,606 41.5 $ 191,470 40.2 Gross profit $ 238,709 58.5 % $ 285,073 59.8 % Cost of Subscription Revenues Cost of subscription revenues increased $14.6 million for fiscal 2024 compared to fiscal 2023, generating a gross margin for subscription revenues of 70.5% compared to a gross margin of 69.2% for fiscal 2023.
Our net losses include the operating results of SimpleNexus from the Acquisition Date. Factors Affecting Our Operating Results Market Adoption of Our Solution . Our future growth depends on our ability to expand our reach to new FI customers and increase adoption with existing customers as they broaden their use of our solutions within and across lines of business.
Our future growth depends on our ability to expand our reach to new FI customers and increase adoption with existing customers as they broaden their use of our solutions within and across lines of business.
We are currently operating in a rising interest rate environment as the United States Federal Reserve raises interest rates as a means to manage inflation.
We are currently operating in a higher interest rate environment as the U.S. Federal Reserve has raised interest rates as a means to manage inflation.
We continue to maintain a valuation allowance against our deferred assets in most jurisdictions, including the U.S. It is determined by management when a valuation allowance should be recorded, utilizing significant judgement and the use of estimates. Beginning in fiscal 2023, we have adopted, as required, Code Section 174, as amended by the Tax Cuts and Jobs Act of 2017.
We continue to maintain a valuation allowance against our deferred tax assets in several jurisdictions, including the U.S. It is determined by management when a valuation allowance should be recorded, utilizing significant judgement and the use of estimates.
Continued Investment in Innovation and Growth . We have made substantial investments in product development, sales and marketing, and strategic acquisitions since our inception to achieve a leadership position in our market and grow our revenues and customer base.
We have made substantial investments in product development, sales and marketing, and strategic acquisitions since our inception to achieve a leadership position in our market and grow our revenues and customer base. We intend to continue to increase our investment in product development in the coming years to maintain and build on this advantage.
The increase in cost of professional services and other revenues also included an increase of $1.7 million in allocated overhead costs due to growth supporting our business, an increase of $0.8 million in travel-related costs, and a $0.4 million increase in reimbursable travel and related expenses for the professional services organization.
The increase in cost of professional services and other revenues also included an increase of $0.8 million in allocated 43 Table of Contents overhead costs due to growth supporting our business, partially offset by a decrease of $0.3 million in travel-related costs.
Upon conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are 49 Table of Contents recorded to the Company's consolidated statements of operations. Determining the useful life of an intangible asset also requires judgment as different types of intangible assets have different lives.
Upon conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the Company's consolidated statements of operations.
Income Taxes Accrued income taxes are reported as a component of either accounts receivable or other accrued liabilities, as appropriate, in our consolidated balance sheets and reflect our estimate of income taxes to be paid or received.
Determining the useful life of an intangible asset also requires judgment as different types of intangible assets have different lives. 50 Table of Contents Income Taxes Accrued income taxes are reported as a component of either accounts receivable or other accrued liabilities, as appropriate, in our consolidated balance sheets and reflect our estimate of income taxes to be paid or received.
The Company incurred charges in the fourth quarter of the Company’s fiscal 2023 of $4.8 million in connection with the Restructuring Plan.
Employees impacted by this event are included in our headcount as of January 31, 2023. The Company incurred charges in the fourth quarter of the Company’s fiscal 2023 of $4.8 million in connection with the Restructuring Plan.
The $19.2 million used in operating activities in fiscal 2022 reflects our net loss of $50.1 million, partially offset by $24.5 million in non-cash charges and $6.4 million generated by changes in working capital accounts.
The $15.4 million used in operating activities in fiscal 2023 reflects our net loss of $101.8 million and $14.9 million used in changes in working capital accounts, partially offset by $101.3 million in non-cash charges.
For example, references in this Annual Report on Form 10-K to "fiscal 2023" refer to the fiscal year ended January 31, 2023. 33 Table of Contents The following section of this Form 10-K discusses our financial condition and results of operations for fiscal 2023 and 2022 and year-to-year comparisons between fiscal 2023 and 2022.
The following section of this Form 10-K discusses our financial condition and results of operations for fiscal 2024 and 2023 and year-to-year comparisons between fiscal 2024 and fiscal 2023.
We determine revenue recognition through the following steps: • Identification of the contract, or contracts, with a customer; • Identification of the performance obligations in the contract; 48 Table of Contents • Determination of the transaction price; • Allocation of the transaction price to the performance obligations in the contract; and • Recognition of revenues when, or as, the Company satisfies a performance obligation Subscription Revenues Subscription revenues primarily consist of fees for providing customers access to our solutions, with routine customer support and maintenance related to email and phone support, bug fixes, and unspecified software updates and upgrades released when and if available during the maintenance term.
Subscription Revenues Subscription revenues primarily consist of fees for providing customers access to our solutions, with routine customer support and maintenance related to email and phone support, bug fixes, and unspecified software updates and upgrades released when and if available during the maintenance term.
Our sales efforts in the U.S. are organized around FIs based on size, whereas internationally we focus our sales efforts by geography. As of January 31, 2023, we had 267 sales and sales support personnel in the U.S., including SimpleNexus, and 77 sales and support personnel in offices outside the U.S.
Our sales efforts in the U.S. are organized around FIs based on size, whereas internationally, we focus our sales efforts by geography.
Our consolidated results of operations for fiscal 2022 and 2023 include the operating results of SimpleNexus from the Acquisition Date. See Note 7 "Business Combinations" of the notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information.
See Note 20 "Subsequent Events" of the notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information. Factors Affecting Our Operating Results Market Adoption of Our Solution .
To help customers go live with our solutions, we offer professional services including configuration and implementation, training, and advisory services. For enterprise FIs, we generally work with SI partners such as Accenture, Deloitte, and PwC for the delivery of professional services for the nCino Bank Operating System.
For enterprise FIs, we generally work with SI partners such as Accenture, Deloitte, and PwC for the delivery of professional services for the nCino Bank Operating System. For regional FIs, we work with SIs such as West Monroe Partners, and for community banks, we work with SIs or perform configuration and implementation ourselves.
We expect general and administrative expenses will decrease as a percentage of revenues as we leverage the investments we have made to date.
Our general and administrative headcount decreased by 26 from January 31, 2023 to January 31, 2024, primarily due to our workforce reduction announced in January 2023. We expect general and administrative expenses will decrease as a percentage of revenues as we leverage the investments we have made to date.
The $278.5 million used in investing activities in fiscal 2022 comprised of $269.0 million used for the acquisition of SimpleNexus, $5.5 million used for the purchase of property and equipment and leasehold improvements to support the expansion of our business, and $4.0 million used for the purchase of an investment.
Net Cash Used in Investing Activities The $6.3 million used in investing activities in fiscal 2024 was comprised of $3.5 million used for the purchase of property and equipment and leasehold improvements to support the expansion of our business, $2.5 million used for the purchase of preferred stock in Rich Data Co, and $0.4 million for the final cash considerations relating to an asset acquisition completed in August 2022.
The increase in sales and marketing expenses also included an increase of $4.1 million in sales-related travel costs, an increase of $3.4 million in marketing costs primarily attributable to the re-establishment of in-person conferences following COVID-19, an increase of $2.7 million in allocated overhead costs, and an increase of $0.9 million in third-party consulting fees.
Also included in the offset to the increase in sales and marketing expenses was a decrease of $1.3 million in marketing costs, a decrease of $1.2 million in sales-related travel costs, and a decrease of $0.6 million in third-party consulting fees.
Also included in the increase in personnel costs is $1.3 million in restructuring costs incurred in connection with the headcount reductions in January 2023. The increase in personnel costs was partially offset by a decrease in expatriate tax equalization expenses compared to fiscal 2022.
The increase in sales and marketing expenses was partially offset by a decrease of $4.3 million in personnel costs, mainly from a decrease in average headcount and a decrease in restructuring costs incurred in connection with the headcount reductions announced in January 2023, partially offset by a $2.1 million increase in stock-based compensation expense, compensation increases, and an increase in expatriate tax equalization expenses.
Cash generated by working capital accounts was principally a function of a $24.3 million increase in deferred revenue, as we expanded our customer base and renewed existing customers, a $7.3 million increase in accrued expenses and other current liabilities, and a $4.4 million increase in accounts payable.
The cash used in working capital accounts was partially offset by a $15.9 million increase in deferred revenue, as we expanded our customer base and renewed existing customers, a $1.9 million decrease in prepaid expenses and other assets, and a $0.5 million increase in accounts payable.
This heritage is the foundation of our deep banking domain expertise, which differentiates us, continues to drive our strategy and makes us uniquely qualified to help FIs cross the modernization divide by providing a comprehensive solution that onboards clients, originates loans, and opens accounts on a single, cloud-based platform.
This heritage is the foundation of our deep banking domain expertise, which differentiates us, continues to drive our strategy, and makes us uniquely qualified to help FIs create new efficiencies by providing an end-to-end platform that spans business lines and combines capabilities for a seamless experience.
We may from time-to-time seek to raise additional capital to support our growth. Any equity financing we may undertake could be dilutive to our existing stockholders, and any debt financing we may undertake could require debt service and financial and operational covenants that could adversely affect our business.
Any equity financing we may undertake could be dilutive to our existing stockholders, and any debt financing we may undertake could require debt service and financial and operational covenants that could adversely affect our business. There is no assurance we would be able to obtain future financing on acceptable terms or at all. nCino K.K.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+1 added−1 removed8 unchanged
Biggest changeA hypothetical 100 basis point change in interest rates would not have had a material impact on our financial results included in 50 Table of Contents this Annual Report on Form 10-K.
Biggest changeAs a result, we are exposed to increased interest rate risk as we make draws. At January 31, 2024, we had no amounts outstanding under the Credit Facility. A hypothetical 100 basis point change in interest rates would 51 Table of Contents not have had a material impact on our financial results included in this Annual Report on Form 10-K.
We do not believe that an immediate 10% increase or decrease in the relative value of the U.S. dollar to other currencies would have a material effect on operating results or financial condition. 51 Table of Contents
We do not believe that an immediate 10% increase or decrease in the relative value of the U.S. dollar to other currencies would have a material effect on operating results or financial condition.
Our market risk exposure is primarily the result of fluctuations in interest rates and foreign currency exchange rates. Interest Rate Risk At January 31, 2023, we had cash, cash equivalents and restricted cash of $87.4 million, which consisted primarily of bank deposits and money market funds. Interest-earning instruments carry a degree of interest rate risk.
Our market risk exposure is primarily the result of fluctuations in interest rates and foreign currency exchange rates. Interest Rate Risk At January 31, 2024, we had cash, cash equivalents, and restricted cash of $117.4 million, which consisted primarily of bank deposits and money market funds. Interest-earning instruments carry a degree of interest rate risk.
Removed
As a result, we are exposed to increased interest rate risk as we make draws. At January 31, 2023, we had $30.0 million outstanding under the Credit Facility. We are exposed to the risk of increasing interest rates as the Credit Facility is at a variable interest rate. As of January 31, 2023, the applicable interest rate was approximately 5.57%.
Added
At January 31, 2024, based on the balances of our cash, cash equivalents, and restricted cash denominated in foreign currencies, a hypothetical 10% increase or decrease in foreign currency exchange rates would have had an impact of approximately $6.2 million on our cash, cash equivalents and restricted cash at January 31, 2024. 52 Table of Contents

Other NCNO 10-K year-over-year comparisons