10q10k10q10k.net

What changed in nCino, Inc.'s 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of nCino, Inc.'s 2022 and 2023 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 2023 report.

+411 added−477 removedSource: 10-K (2023-03-28) vs 10-K (2022-03-31)

Top changes in nCino, Inc.'s 2023 10-K

411 paragraphs added · 477 removed · 311 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

81 edited+31 added−46 removed15 unchanged
Biggest changeTo 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. 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.
Biggest changeWe 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.
We initially focused the nCino Bank Operating System on transforming commercial and small business lending for community and regional banks. We introduced this solution to enterprise banks in the United States ("U.S.") in 2014, and then internationally in 2017, and have subsequently expanded across North America, Europe and Asia-Pacific ("APAC").
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").
As a result, nCino has been able to support many causes and initiatives in the community, such as sponsoring the local Martin Luther King, Jr. march, volunteering with veteran's organizations that aid military personnel in their transition back to civilian life, and being a premier sponsor of an all-girls middle/high school that focuses primarily on STEM education.
As a result, nCino has been able to support many causes and initiatives in the community, such as sponsoring the local Martin Luther King, Jr. march, volunteering with veterans’ organizations that aid military personnel in their transition back to civilian life, and being a premier sponsor of an all-girls middle/high school that focuses primarily on STEM education.
This 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. • Deposit Account Opening.
The nCino Bank Operating System can facilitate the origination of an institution’s most complex commercial lending products, including syndicated loans, commercial and industrial loans, commercial real estate loans, and construction loans, while also supporting the depth required for specific products such as agriculture lending, asset based lending, SBA loans, and leasing.
The nCino Bank Operating System can facilitate the origination of an FI’s most complex commercial lending products, including syndicated loans, commercial and industrial loans, commercial real estate loans and construction loans, while also supporting the depth required for specific products such as agriculture lending, asset-based lending, SBA loans and leasing.
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 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.
For these reasons, we have built nCino with a cultural foundation based on our six core values: Bring Your A-Game, Do the Right Thing, Respect Each Other, Make Someone’s Day, Have Fun, and Be a Winner!
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.
In one view, all stakeholders have visibility into where the loan process stands and what data is needed to complete the process. Post-closing, the nCino Bank Operating System provides a view into loan performance and tools for portfolio management, providing financial institution employees the ability to utilize information to maximize efficiency.
In one view, all stakeholders have visibility into where the loan process stands and what data is needed to complete the process. Post-closing, the nCino Bank Operating System provides a view into loan performance and tools for portfolio management, providing FI employees the ability to utilize information to maximize efficiency.
With Nexus Engagement ™ , financial institutions can collaborate with borrowers and real estate partners from the pre-application phase, offering relationship-building tools like payment calculators, integrated home search, and instant chat that help convert more leads into closed loans.
With Nexus Engagement™, FIs can collaborate with borrowers and real estate partners from the pre-application phase, offering relationship-building tools like payment calculators, integrated home search and instant chat that help convert more leads into closed loans.
For example, in fiscal 2020 we acquired Visible Equity, LLC ("Visible Equity") and FinSuite Pty Ltd ("FinSuite") as part of our strategy to build out our nIQ capabilities and we established our nCino K.K. joint venture to facilitate our entry into the Japanese market.
For example, in fiscal 2020 we acquired nCino Portfolio Analytics, LLC (formerly Visible Equity) and FinSuite Pty Ltd ("FinSuite") as part of our strategy to build out our nIQ capabilities, and we established our nCino K.K. joint venture to facilitate our entry into the Japanese market.
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 each financial institution to help identify and understand their unique needs, challenges, goals, and opportunities.
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.
Financial institutions can also leverage the data visualization and predictive analytics capabilities of nIQ’s Portfolio Analytics solution to maintain a holistic view of portfolio trends, discover new lending opportunities, and proactively address risk within different segments.
FIs can also leverage the data visualization and predictive analytics capabilities of nIQ’s Portfolio Analytics solution to maintain a holistic view of portfolio trends, discover new lending opportunities, and proactively address risk within different segments.
As a native cloud platform that utilizes a single code base regardless of the size and complexity of the financial institution, 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 customer.
The loan origination functionality embedded within the nCino Bank Operating System combines an innovative and intuitive framework with automated workflow, checklists, document management, analytics, and real-time reporting to provide a complete, end-to-end loan origination system from application, to underwriting, to adjudication, 4 Table of Contents to document preparation, to closing.
The loan origination functionality embedded within the nCino Bank Operating System combines an innovative and intuitive framework with automated workflow, checklists, document management, analytics and real-time reporting to provide a complete, end-to-end loan origination system from application, to underwriting, to adjudication, to document preparation, to closing.
How nCino Will Grow We intend to continue growing our business by executing on the following strategies: • Expand Within and Across our Existing Customers. We believe there is a significant opportunity to further expand within our existing customer base both vertically within business lines and horizontally across business lines, including cross-selling SimpleNexus.
How nCino Will Grow We intend to continue growing our business by executing on the following strategies: • Expand Within and Across our Existing Customers. We believe there is a significant opportunity to further expand within our existing customer base both vertically within business lines and horizontally across business lines.
We believe our success in growing our business will depend on our ability to demonstrate to financial institutions 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 to those of third-party vendors or internally developed systems.
Our loan origination functionality supports a wide range of lending products across commercial, small business, and retail lines of business.
Our loan origination functionality supports a wide range of lending products across commercial, small business and consumer lines of business.
We believe our ability to provide client onboarding, loan origination, deposit account opening, analytics, and AI/ML on a single platform across commercial, small business, and retail lines of business, our deep banking domain expertise, our mobile-first homeownership platform, our reputation for high-quality professional services and customer support, and the culture of our company distinguish us from our competition.
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.
Built into the nCino Bank Operating System is client onboarding functionality that supports the front, middle, and back office onboarding process, allowing banks and credit unions to effectively evaluate the risk of doing business with a client while providing clients an efficient and personalized user experience.
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.
How the nCino Bank Operating System Works The nCino Bank Operating System connects financial institution employees, clients, and third parties on a single, cloud-based platform, eliminating silos and bringing new levels of coordination and transparency to the institution.
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.
Through integrations, Nexus Origination ™ connects with mortgage loan origination systems, pricing engines, credit ordering systems, CRMs, appraisal management systems, and other mortgage industry-related systems. Nexus Closing ™ streamlines each financial institution’s preferred closing workflow, from traditional mortgage closings where documents are wet-signed in person to fully digital eClosings with remote online notarization.
Through integrations, Nexus Origination™ connects with mortgage loan origination systems, pricing engines, credit ordering systems, CRM solutions, appraisal management systems and other mortgage industry-related systems. Nexus Closing™ streamlines each FI’s preferred closing workflow, from traditional mortgage closings where documents are wet-signed in person, to fully digital eClosings with remote online notarization.
Nexus Vision’s visual dashboards, role-based scorecards, contextual comparisons, and detailed drill-downs help financial institutions forecast revenue, identify and resolve production bottlenecks, prioritize loan teams’ activities, and evaluate individual and branch performance with just a few clicks.
Nexus Vision’s visual dashboards, role-based scorecards, contextual comparisons and detailed drill-downs help FIs forecast revenue, identify and resolve production bottlenecks, prioritize loan teams’ activities and evaluate individual and branch performance with just a few clicks. • A Powerful Ecosystem.
Once a loan has closed, CompenSafe ™ automatically calculates associated incentive compensation for loan officers, processors, and operations staff for improved accuracy, transparency, and compliance that reduces financial institutions’ administrative burden. Throughout each phase of the homeownership journey, Nexus Vision ™ provides business intelligence ("BI") that improves visibility and increases productivity across financial institutions’ lending operations.
Once a loan has closed, CompenSafe™ automatically calculates associated incentive compensation for loan officers, processors and operations staff for improved accuracy, transparency and compliance that reduces FIs’ administrative burden. Finally, throughout each phase of the homeownership journey, Nexus Vision™ provides business intelligence ("BI") that improves 3 Table of Contents visibility and increases productivity across FIs’ lending operations.
We seek patent protection for certain of our key innovations, protocols, processes, and other inventions. We pursue the registration of our trademarks, service marks, and domain names in the United States and in certain other locations.
We seek patent protection for certain of our key innovations, protocols, processes, and other inventions. We pursue the registration of our trademarks, service marks, and domain names in the U.S. and in certain other locations.
Our initial deployment with a customer generally focuses on implementing a client onboarding, loan origination, and/or deposit account opening application in a specific line of business within the financial institution, such as commercial, small business, or retail.
Our initial deployment with a customer generally focuses on implementing a client onboarding, loan origination and/or deposit account opening application in a specific line of business within the FI, such as commercial, small business or consumer.
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 financial institutions in the United States. Our original agreement with Salesforce was entered into in December 2011.
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 recognition of our continued focus on employee engagement, satisfaction, and culture, we have received numerous awards, including being named one of the Highest-Rated Public Cloud Computing Companies To Work For in 2021 by Battery Ventures and in the top 3 for Best Companies for Career Growth in 2021 by Comparably.
In recognition of our continued focus on employee engagement, satisfaction and culture, we have received numerous awards, including being named one of the Highest-Rated Public Cloud Computing Companies to Work For in 2021 by Battery Ventures.
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. Financial institutions can utilize the intuitive, scalable, and flexible workflow to open retail, commercial, or small business accounts efficiently while maintaining individual account processes and requirements.
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.
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; and • ability to integrate with third-party applications and systems.
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.
We deliver 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 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.
Open APIs By leveraging open APIs and productized integrations, the nCino Bank Operating System creates an open 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 a financial institution’s data, creating an actionable single data platform and warehouse.
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.
Clients are able to upload documents directly into the nCino Bank Operating System, complete identity verification, and provide information about themselves and their business, providing transparency to the financial institution that enables regulatory compliance, such as Know-Your-Customer (“KYC”).
Clients are able to upload documents directly into the nCino Bank Operating System, complete identity verification and provide information about themselves and their business, offering a level of transparency to the FI that enables regulatory compliance, such as Know-Your-Customer (“KYC”).
This centralized hub enables data to be more easily accessed, modeled, and analyzed to help deliver greater operational, portfolio, and financial intelligence, a more complete client view, improved compliance monitoring and metrics, as well as the opportunity to more successfully leverage AI/ML.
In an industry where every moment matters, this centralized hub enables data to be more easily accessed, modeled and analyzed to help deliver greater operational, portfolio and financial intelligence, a more complete client view and improved compliance monitoring and metrics, as well as the opportunity to leverage artificial intelligence and machine learning ("AI/ML") more successfully.
In addition, we offer competitive parental leaves, holiday pay, and vacation time. nCino supports healthy employee lifestyles and wellness by offering office step challenges, complimentary healthy snacks, financial education, mental health initiatives, cycle to work programs, on-site flu shots, recreational outings and more.
In addition, we offer competitive parental leaves, holiday pay, student debt repayment programs and vacation time and flex holidays. nCino supports healthy lifestyles and wellness by offering office step challenges, nutritious snacks, standing and treadmill desks, financial education, mental health initiatives, cycle to work programs, on-site flu shots, recreational outings and more.
With enhanced onboarding reporting tools, banks and credit unions 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 provide more value-added services and custom-tailored offerings. 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. 2 Table of Contents • Loan Origination.
We provide opportunities for innovation through hackathons and new technology pilots, and we encourage customers 9 Table of Contents to participate in our Product Design Programs to provide us with input on our product development roadmap. Our research and development spend was $79.4 million or 29.0% of total revenues in fiscal 2022.
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.
These activities are achieved through nCino's philanthropic and community service team, nVolve. Through nVolve, nCino prioritizes giving back to our communities and volunteering time by providing all global employees paid volunteer days separate from regular leave or holidays to support organizations and causes that are important to them. nCino is rooted in building a diverse, equitable and inclusive workforce.
These are just some of the activities achieved through nCino's philanthropic and community service team, nVolve. Through nVolve, nCino prioritizes giving back to our communities and volunteering time by providing all global employees paid volunteer days separate from regular leave or holidays to support organizations and causes that are important to them .
We work with some of the world’s leading SIs to help implement this solution, 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 solutions, which has increased our capacity to deliver and deploy the nCino Bank Operating System and enabled us to scale more quickly.
We 7 Table of Contents promote sales in North America out of our offices in the United States and Canada, in APAC out of our offices in Australia and Japan, and in EMEA 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 and Japan, and in EMEA primarily out of our office in the UK. • Continue Strengthening and Extending our Product Functionality.
Our Customers nCino has a diverse customer base ranging from global financial institutions, such as Bank of America, Barclays, Santander Bank, and TD Bank, to enterprise banks, such as KeyBank, Allied Irish Bank, First Horizon Bank, and Truist Bank, to regional and community banks, like Huntingdon Valley Bank and ConnectOne Bank to credit unions, such as Corning Credit Union, Navy Federal Credit Union, SAFE Credit Union, and Wright-Patt Credit Union, to new market entrants, such as challenger banks like B-North, Recognise Financial, and Judo Bank, to, through SimpleNexus, independent mortgage banks like Synergy One Lending and Fairway Independent Mortgage Corporation.
Our 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.
These offerings demonstrate a commitment to our employees’ well-being and play a critical role in engaging and retaining the talented individuals that comprise our organization. 11 Table of Contents Available Information Our website is located at www.ncino.com and our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other filings with the Securities and Exchange Commission (“SEC”), and all amendments to these filings, can be obtained free of charge from our website as soon as reasonably practicable after we electronically file or furnish such materials with the SEC.
Available Information Our website is located at www.ncino.com and our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other filings with the Securities and Exchange Commission (“SEC”), and all amendments to these filings, can be obtained free of charge from our website as soon as reasonably practicable after we electronically file or furnish such materials with the SEC.
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.
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.
In the nCino User Community, users can access over 8,800 product guides and technical documents, engage and share best practices with other users and nCino subject matter experts through over 35 unique user groups, suggest and vote for future product development ideas, and access training videos, materials and product certifications.
In the nCino User Community, users can access product guides, technical documents and support articles, engage and share best practices with other users and nCino subject matter experts through a variety of general and solution-focused discussion groups, suggest and vote for future product development ideas, and access training videos, materials and product certifications.
With financial institutions needing to replace legacy point products with more efficient technology and banking services continuing to shift to digital, we believe there is a significant opportunity to deliver our solutions and expand our customer base to financial institutions of all sizes and complexities around the world.
With FIs needing to replace legacy point products with modern technology and increased consumer demand for digital services, we believe there is a significant opportunity to deliver our solutions and expand our customer base to FIs of all sizes and complexities around the world.
SimpleNexus SimpleNexus offers, on a single, multi-tenant SaaS platform, a suite of products that enables loan officers, borrowers, real estate agents, settlement agents and others to easily engage in the homeownership process from any internet-enabled device.
With the acquisition of SimpleNexus, nCino now offers a suite of products that enable loan officers, borrowers, real estate agents, settlement agents and others to easily engage in the homeownership process from any internet- enabled device.
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 DocuSign, Equifax, Experian, TransUnion, IDology, LexisNexis, OneSpan, and The Risk Management Association, are integrated with this solution. • Selectively Pursue Strategic Transactions.
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.
Through nIQ’s Automated Spreading feature, banks and credit unions can streamline manual data entry processes throughout the underwriting process and automatically capture more data, reducing the time it takes to spread and process documents, enabling bankers to devote more time to insightful financial analysis and building better relationships with their clients.
Through nIQ’s Automated Spreading feature, FIs can streamline manual data entry processes throughout the underwriting process and automatically capture more data, reducing the time it takes to spread and process documents and enabling bankers to devote more time to insightful financial analysis and focus on value-add activities.
We therefore invest in their financial, social and physical wellness as well as the communities where they work. nCino’s future success is dependent on our ability to attract and retain highly qualified personnel. nCino offers competitive compensation, opportunities for equity ownership, and generous, country-specific benefit packages. Our retirement plans help employees invest in their future.
Because nCino’s future success is dependent on our ability to attract and retain highly qualified personnel, we offer competitive compensation, opportunities for equity ownership, retirement plans to help employees invest in their future and generous, country-specific benefit packages.
With an open application programming interface ("API") technology framework and integrations with third-party data sources, banks and credit unions can use the nCino Bank Operating System to augment their client and operational data and create a paperless centralized data hub that enhances data-driven decision-making.
In addition, with an open application programming interface ("API") technology framework and integrations with third-party data sources, FIs can use nCino to augment their client and operational data and create a paperless, centralized hub that enhances data-driven decision-making. Our Journey nCino was originally founded in a bank to improve that FI’s operations and client service.
Our customers leverage nCino’s capabilities to drive revenue growth by digitally expanding their brand presence and reach, increasing access and convenience for their employees and clients, delivering new products to grow client wallet share, and improving client satisfaction and retention.
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.
Competition The primary competition for our solutions has historically been point solution vendors and systems internally developed by financial institutions.
Competition Historically, the primary competition for the nCino Bank Operating System has been point solution vendors and systems developed internally by FIs.
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. • Establish a Data, Audit and Business Intelligence Hub .
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 is designed to scale with our customers and once this solution is deployed, we seek to have our customers expand adoption within and across lines of business. The nCino Bank Operating System leverages common data sets and functionality across applications, which optimizes and accelerates its deployment throughout a financial institution.
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.
By embedding insights and automation into the loan lifecycle, nCino empowers financial institutions to accelerate revenue growth, improve operational efficiency, and more effectively satisfy customers.
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.
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.
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.
In addition, we have over 1,000 financial institutions that have contracted for our Portfolio Analytics solution that we acquired with the Visible Equity acquisition in fiscal 2020 and over 400 customers that have contracted with SimpleNexus. In total, we had over 1,750 customers as of January 31, 2022.
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.
As of January 31, 2022, we had 1,681 employees, of which approximately 86% were in the United States and 14% were in other locations around the globe. We believe our employee engagement and experience remain strong.
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%).
We believe we have a mutually beneficial strategic relationship with Salesforce. 8 Table of Contents Salesforce Ventures, an affiliate of Salesforce, made investments in our common stock in January 2014, March 2015, July 2017, January 2018, and September 2019. As of January 31, 2022, Salesforce owned less than 5% of shares of our common stock.
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.
Throughout this market expansion, we broadened the nCino Bank Operating System by adding functionality for retail lending, client onboarding, deposit account opening, analytics and AI/ML. This holistic solution enables us to provide a single digital banking platform for banks and credit unions of all sizes on a global basis.
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.
We are in the business of fundamentally changing the way financial institutions operate. To transform an industry, we believe it is essential to have a company culture that not only empowers its employees to challenge the status quo, but also emboldens them to drive change and have a passion for customer success.
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.
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.
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.
Once implemented, this solution becomes deeply embedded in our customers’ business processes, enabling mission critical workflow across the financial institution on a single platform and allowing our customers to serve their clients without locality or access constraints.
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.
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 banks and credit unions while leveraging Salesforce's global infrastructure, reliability, and scalability. 1 Table of Contents We generally offer the nCino Bank Operating System on a subscription basis pursuant to non-cancellable multi-year contracts that typically range from three to five years, and we employ a “land and expand” business model.
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.
To demonstrate a commitment to a culture of inclusiveness, nCino proudly sponsors an employee-led Diversity, Equality, and Inclusion Council as well as Employee Affinity Groups focused on our Veteran, LGBTQIA+, Latinx, AAPI, Black/African-American, and Women employee populations.
To further our commitment to a culture of inclusiveness, our employee-led Diversity, Equality and Inclusion Council meets regularly with nCino’s Executive Leadership Team. In addition, nCino is home to six Employee Resource Groups (“ERGs”), which serve our Veteran, LGBTQIA+, Latinx, AAPI, Black/African-American, and Women employee populations.
This unified platform provides all of the functionality necessary to complete mission-critical workflow, enabling client onboarding, loan origination, deposit account opening, analytics, and compliance. nCino Bank Operating System Applications Client Onboarding.
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.
In 2021, nCino hired a full-time Diversity, Community, and Inclusion leader to champion these initiatives, education, and programs, with support and oversight from nCino’s CEO and Human Resources leadership.
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.
In recognition of our continued focus on employee engagement, satisfaction and culture, we have received numerous awards, including being named one of the Highest-Rated Public Cloud Computing Companies To Work For in 2021 by Battery Ventures. nCino was also presented with 15 workplace-focused awards by Comparably, a leading workplace culture and compensation monitoring site, in 2021, including Best Company for Diversity, Best Company Culture, Best Career Growth, Best Work-Life Balance and Best Company Happiness.
In 2022, nCino was also presented with 16 workplace-focused awards by Comparably, a leading workplace culture and compensation monitoring site, including Best CEOs for Diversity, Best Company for Women, Best Company Culture, Best Company Career Growth, Best Company Work-Life Balance and Best Company Happiness.
Our Company culture values broad backgrounds, thoughts, opinions, and perspectives. Our talent acquisition strategy includes relationships with diverse professional organizations and minority colleges and universities. 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.
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.
Additionally, in January 2022, we completed our acquisition of SimpleNexus which expanded our capabilities to the U.S. point-of-sale mortgage market.
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.
Because the nCino platform is highly configurable, it can adjust as regulations and the institution's risk requirements evolve. • An intelligent enterprise content management system that 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.
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.
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, allowing our customers to spend more time on value creating activities.
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.
These companies represent a cross-section of financial institutions across asset classes and geographies and each of these customers represent a substantial level of Annual Contract Value ("ACV") in its respective category.
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.
For regional financial institutions, we work with SIs such as West Monroe Partners, and for community banks we work with SIs such as Enforce or we perform configuration and implementation ourselves. Where 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 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.
The nCino Bank Operating System delivers a seamless experience across devices, channels, and products, enabling a unified digital relationship between a financial institution, its employees, clients, and third parties, such as appraisers, lawyers, and regulators. This empowers financial institution employees to be more efficient and effective and enhance relationships with their clients.
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.
We plan to continue investing in expanding the breadth and depth of our solutions and expanding internationally. We believe our product development and global expansion initiatives will continue to drive revenue and customer growth. For instance, the acquisition of SimpleNexus provides significant cross-sell opportunities to banks and credit unions in the United States.
We believe our product development and global expansion initiatives will continue to drive revenue and customer growth and further enable the transformation of the financial services industry.
Over 44,000 of our customers’ employees, representing over 97% of our financial institution customers utilizing our client onboarding, loan origination, and/or deposit account opening applications, participate in our online nCino User Community.
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.
This heritage is the foundation of our deep banking domain expertise, which differentiates us and continues to drive our 6 Table of Contents strategy to design software that addresses the unique challenges of our financial institution customers globally. • Cloud Banking Technology Pioneer and Market Leader.
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.
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. nCino Bank Operating System Platform The client onboarding, loan origination and deposit account opening applications are built on the nCino Bank Operating System platform, which contains common data sets and functionality including: • Business process automation that provides workflow to define, streamline, and connect the business processes associated with a financial institution’s front, middle, and back office operations.
The deposit account opening application allows clients to open an account digitally, across any device, in a branch or through a call center, with speed and flexibility. • nIQ: The nCino Bank Operating System is powered by nIQ, which leverages AI/ML and analytics, helping FIs become more predictive, personalized and proactive.
Our marketing teams oversee all aspects of the nCino global brands including public relations, digital marketing, social media, product marketing, graphic design, conferences, and events. Our marketing efforts are focused on promoting direct sales, inbound lead generation, and brand building.
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 .
Configuration and implementation engagements typically range in duration from three to 18 months, depending on scope. For enterprise financial institutions, we generally work with SIs such as Accenture, Deloitte, and PwC.
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.

… 78 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

116 edited+12 added−12 removed198 unchanged
Biggest changeConsistent with the foregoing, we are exposed to a variety of risks, including risks associated with the following: • We have a limited operating history, 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 operating losses and may not achieve or sustain profitability 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. 12 Table of Contents • 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. • 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, Amazon Web Services ("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. 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.
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.
Treasury Department in order to fully assess their effects, and there may be substantial delays before such regulations are promulgated and/or finalized, increasing the uncertainty as to the ultimate effects of the Tax Cuts and Jobs Act and CARES Act on us and our stockholders.
Treasury Department in order to fully assess their effects, and there may be substantial delays before such regulations are promulgated and/or finalized, increasing the uncertainty as to the ultimate effects of the Tax Cuts and Jobs Act on us and our stockholders.
There also may be technical corrections legislation or other legislative changes proposed with respect to the Tax Cuts and Jobs Act and CARES Act, the effects of which cannot be predicted and may be adverse to us or our stockholders.
There also may be technical corrections legislation or other legislative changes proposed with respect to the Tax Cuts and Jobs Act, the effects of which cannot be predicted and may be adverse to us or our stockholders.
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.
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.
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 licensing terms; • additional costs for the support or professional services model of the acquired company; 20 Table of Contents • 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, 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.
We will also face increased costs associated with growth and the expansion of our customer base and have seen increased costs in becoming a public company. Our efforts to grow our business may be more costly than we expect, and we may not be able to increase our revenues enough to offset our increased operating expenses.
We will also face increased costs associated with growth and the expansion of our customer base and have seen increased costs in being a public company. Our efforts to grow our business may be more costly than we expect, and we may not be able to increase our revenues enough to offset our increased operating expenses.
If financial institutions are unwilling or unable to transition from their legacy systems, or if the demand for our solutions does not meet our expectations, our results of operations and financial condition will be adversely affected. We may not be able to sustain our revenue growth rate in the future.
If FIs are unwilling or unable to transition from their legacy systems, or if the demand for our solutions does not meet our expectations, our results of operations and financial condition will be adversely affected. We may not be able to sustain our revenue growth rate in the future.
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 (the “Credit Facility”).
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.
In July 2020, the Court of Justice of the European Union (the "CJEU") in its Schrems II ruling invalidated the EU-U.S. Privacy Shield framework, a self-certification mechanism that facilitated the lawful transfer of personal data from the EEA to the United States, with immediate effect.
In July 2020, the Court of Justice of the European Union (the "CJEU") in its Schrems II ruling invalidated the EU-U.S. Privacy Shield framework, a self-certification mechanism that facilitated the lawful transfer of personal data from the EEA to the U.S., with immediate effect.
We currently compete with providers of technology and services in the financial services industry, primarily point solution vendors that focus on building functionality that competes with specific components of our solutions. From time to time, we also compete with systems internally developed by financial institutions.
We currently compete with providers of technology and services in the financial services industry, primarily point solution vendors that focus on building functionality that competes with specific components of our solutions. From time to time, we also compete with systems internally developed by FIs.
Any of our facilities may be harmed or rendered inoperable by natural or man-made disasters, including hurricanes, tornadoes, wildfires, floods, earthquakes, nuclear disasters, acts of terrorism or other criminal activities, infectious disease outbreaks or pandemic events, including the COVID-19 pandemic, power outages, and other infrastructure failures, which may render it difficult or impossible for us to operate our business for some period of time.
Any of our facilities may be harmed or rendered inoperable by natural or man-made disasters, including hurricanes, tornadoes, wildfires, floods, earthquakes, nuclear disasters, acts of terrorism or other criminal activities, infectious disease outbreaks or pandemic events, power outages, and other infrastructure failures, which may render it difficult or impossible for us to operate our business for some period of time.
However, our amended and 30 Table of Contents restated certificate of incorporation contains a federal forum provision which provides that unless the Company consents in writing to the selection of an alternative forum, the federal district courts of the United States of America will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
However, our amended and restated certificate of incorporation contains a federal forum provision which provides that unless the Company consents in writing to the selection of an alternative forum, the federal district courts of the United States of America will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
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.
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.
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.
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.
The CCPA 17 Table of Contents gives California residents expanded rights to access and delete their personal information, receive detailed information about how their personal information is used and shared by requiring covered companies to provide new disclosures to California consumers (as that term is broadly defined), and provide such consumers rights to opt-out of certain sales of personal information.
The CCPA gives California residents expanded rights to access and delete their personal information, receive detailed information about how their personal information is used and shared by requiring covered companies to provide new disclosures to California consumers (as that term is broadly defined), and provide such consumers rights to opt-out of certain sales of personal information.
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 financial institutions.
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.
While SIs generally contract directly with our customers, any failure or delay by the SIs we work with in providing adequate service and support would likely adversely affect our brand and reputation. For implementations we conduct ourselves, project delays may result in recognizing revenues later than expected.
While SI partners generally contract directly with our customers, any failure or delay by the SI partners we work with in providing adequate service and support would likely adversely affect our brand and reputation. For implementations we conduct ourselves, project delays may result in recognizing revenues later than expected.
Many financial institutions have invested substantial personnel and financial resources in legacy software, and these institutions 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 legacy software, and these FIs may be reluctant, unwilling, or unable to convert from their existing systems to our solutions.
For example, purchases of our Paycheck Protection Program ("PPP") solution during the COVID pandemic may have had the effect of accelerating demand that might have otherwise materialized as new business in later periods as well as accelerating the activation of the licenses and 14 Table of Contents recognition of subscription revenues associated with the PPP solution.
For example, purchases of our Paycheck Protection Program ("PPP") solution during the COVID pandemic may have had the effect of accelerating demand that might have otherwise materialized as new business in later periods as well as accelerating the activation of the licenses and recognition of subscription revenues associated with the PPP solution.
Use of, and reliance on, cloud-based banking technology is still at an early stage and we do not know whether financial institutions 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 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.
As a result, we may in the future be required to change our pricing 15 Table of Contents 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.
Many of our competitors have significantly more financial, technical, marketing and other resources than we have, may devote greater resources to the development, 19 Table of Contents promotion, sale and support of their systems than we can, have more extensive customer bases and broader customer relationships than we have and have longer operating histories and greater name recognition than we do.
Many of our competitors have significantly more financial, technical, marketing and other resources than we have, may devote greater resources to the development, promotion, sale and support of their systems than we can, have more extensive customer bases and broader customer relationships than we have and have longer operating histories and greater name recognition than we do.
In addition, federal, state, and/or foreign agencies may attempt to further regulate our activities in the future which could adversely affect our business and results of operations. 21 Table of Contents Any legal proceedings against us could adversely affect our operations and prospects, damage our reputation, and be costly and time-consuming to defend.
In addition, federal, state, and/or foreign agencies may attempt to further regulate our activities in the future which could adversely affect our business and results of operations. Any legal proceedings against us could adversely affect our operations and prospects, damage our reputation, and be costly and time-consuming to defend.
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.
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.
Additionally, as the markets for our solutions develop, we may be unable to attract new customers based on the same subscription model we have used historically. Moreover, large or influential financial institution customers may demand more favorable pricing or other contract terms from us.
Additionally, as the markets for our solutions develop, we may be unable to attract new customers based on the same subscription model we have used historically. Moreover, large or influential FI customers may demand more favorable pricing or other contract terms from us.
In addition, while much of our operations are not directly subject to the same regulations applicable to financial institutions, we are generally obligated to our customers to provide software solutions and maintain internal systems and processes that comply with certain federal and state regulations applicable to them.
In addition, while much of our operations are not directly subject to the same regulations applicable to FIs, we are generally obligated to our customers to provide software solutions and maintain internal systems and processes that comply with certain federal and state regulations applicable to them.
Matters subject to review and examination by federal and state financial institution regulatory agencies and external auditors include our internal information technology controls in connection with our performance of data processing services, the agreements giving rise to those processing activities, and the design of our solutions.
Matters subject to review and examination by federal and state FI regulatory agencies and external auditors include our internal information technology controls in connection with our performance of data processing services, the agreements giving rise to those processing activities, and the design of our solutions.
If we are unable to successfully expand our product offerings beyond our current solutions, our customers could migrate to competitors who may offer a broader or more attractive range of products and services. For example, we recently launched our Commercial Pricing and Profitability solution, powered by nIQ, and we may fail to achieve market acceptance of this offering.
If we are unable to successfully expand our product offerings beyond our current solutions, our customers could migrate to competitors who may offer a broader or more attractive range of products and services. For example, in fiscal 2022, we launched our Commercial Pricing and Profitability solution, powered by nIQ, and we may fail to achieve market acceptance of this offering.
The CPRA will, among other things, impose additional data protection obligations on companies doing business in California, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data.
Among other things, the CPRA imposes additional data protection obligations on companies doing business in California, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data.
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 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 fiscal 2022 we acquired SimpleNexus, our 17 Table of Contents largest acquisition to date.
We expect that there will continue to be new proposed and adopted laws, regulations, and industry standards concerning privacy, data protection, and information security in the United States, the EU, and other jurisdictions in which we operate. For instance, the California Consumer Privacy Act (the "CCPA") became effective on January 1, 2020.
We expect that there will continue to be new proposed and adopted laws, regulations, and industry standards concerning privacy, data protection, and information security in the U.S., the EU, and other jurisdictions in which we operate. For instance, the California Consumer Privacy Act (the "CCPA") became effective on January 1, 2020.
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; 28 Table of Contents • 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; • 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, including those resulting from COVID-19, 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 • other events or factors, political conditions, election cycles, war or incidents of terrorism, or responses to these events.
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; • 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 (particularly those affecting financial institutions); • 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 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; 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.
Our failure to comply with laws and regulations applicable to us as a technology provider to financial institutions could adversely affect our business and results of operations, increase costs, and impose constraints on the way we conduct our business.
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.
Personal privacy, information security, and data protection are significant issues in the United States, 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”), 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.
Sales of our common stock by Insight Partners could have an immediate and substantial adverse effect on the value of our common stock. Our customers are highly regulated and subject to a number of challenges and risks.
Sales of our common stock by Insight Partners could have an immediate and substantial adverse effect on the value of our common stock. 18 Table of Contents Our customers are highly regulated and subject to a number of challenges and risks.
We also cannot be sure that our existing general 16 Table of Contents liability insurance coverage and coverage for errors or omissions will be available on acceptable terms or will be available in sufficient amounts to cover one or more claims, or that our insurers will not deny or attempt to deny coverage as to any future claim.
We also cannot be sure that our existing general liability insurance coverage and coverage for errors or omissions will be available on acceptable terms or will be available in sufficient amounts to cover one or more claims, or that our insurers will not deny or attempt to deny coverage as to any future claim.
To safeguard these rights, we rely on a combination of patent, trademark, copyright, and trade secret laws and contractual protections in the United States and other jurisdictions, all of which provide only limited protection and may not now or in the future provide us with a competitive advantage.
To safeguard these rights, we rely on a combination of patent, trademark, copyright, and trade secret laws and contractual protections in the U.S. and other jurisdictions, all of which provide only limited protection and may not now or in the future provide us with a competitive advantage.
Furthermore, these financial institutions may be reluctant, unwilling, or unable to use cloud-based banking technology due to various concerns such as the security of their data and reliability of the delivery model.
Furthermore, these FIs may be reluctant, unwilling, or unable to use cloud-based banking technology due to various concerns such as the security of their data and reliability of the delivery model.
As a provider of technology to financial institutions, we have been, and expect to continue to be, examined on a periodic basis by various regulatory agencies and may be required to review certain of our suppliers and partners.
As a provider of technology to FIs, we have been, and expect to continue to be, examined on a periodic basis by various regulatory agencies and may be required to review certain of our suppliers and partners.
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.
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.
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.
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.
Further, at any time, if we violate the terms of the Credit Facility or otherwise fail to meet our covenants, we may not be able to 32 Table of Contents obtain a waiver from the lenders under satisfactory terms, if at all, which would limit our operating flexibility and/or liquidity and which would have an adverse effect on our business and prospects.
Further, at any time, if we violate the terms of the Credit Facility or otherwise fail to meet our covenants, we may not be able to obtain a waiver from the lenders under satisfactory terms, if at all, which would limit our operating flexibility and/or liquidity and which would have an adverse effect on our business and prospects. Item 1B.
Our revenue growth may also slow or even reverse in future periods due to a number of factors, which may include slowing demand for our solutions, our ability to successfully sell and implement new applications, such as our retail applications, increasing competition, decreasing growth of our overall market, the impact of COVID-19, our inability to attract and retain a sufficient number of financial institution customers, concerns over data security, our failure, for any reason, to capitalize on growth opportunities, or general economic conditions.
Our revenue growth may also slow or even reverse in future periods due to a number of factors, which may include slowing demand for our solutions, our ability to successfully sell and implement new applications, such as our retail applications, increasing competition, decreasing growth of our overall market, our inability to attract and retain a sufficient number of FI customers, concerns over data security, our failure, for any reason, to capitalize on growth opportunities, or general economic conditions.
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 $138.2 million for fiscal 2020 to $204.3 million for fiscal 2021 to $273.9 million for fiscal 2022.
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.
For example, our revenue growth strategy includes increased penetration of markets outside the United States as well as selling our retail applications to existing and new customers, and failure in either respect would adversely affect our revenue growth.
For example, our revenue growth strategy includes increased penetration of markets outside the U.S. as well as selling our retail applications to existing and new customers, and failure in either respect would adversely affect our revenue growth.
These regulations may limit the export of our solutions and provision of our solutions outside of the United States, or may require export authorizations, including by license, a license exception, or other appropriate government authorizations, including annual or semi-annual reporting and the filing of an encryption registration.
These regulations may limit the export of our solutions and provision of our solutions outside of the U.S., or may require export authorizations, including by license, a license exception, or other appropriate government authorizations, including annual or semi-annual reporting and the filing of an encryption registration.
We must attract and retain highly qualified personnel. In particular, we are dependent upon the services of our senior leadership team, and the loss of any member of this team could adversely affect our business. Competition for executive officers, software developers, sales personnel, and other key employees in our industry is intense.
In particular, we are dependent upon the services of our senior leadership team, and the loss of any member of this team could adversely affect our business. Competition for executive officers, software developers, sales personnel, and other key employees in our industry is intense.
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 United States and practical difficulties in enforcing intellectual property and other rights outside of the United States; • 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. 24 Table of Contents Our international contracts often provide for payment denominated in local currencies, and the majority of our local costs are denominated in local currencies.
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.
There is a risk that open source software licenses could be construed in a manner that imposes unanticipated 26 Table of Contents conditions or restrictions on our ability to market or provide our solutions.
There is a risk that open source software licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to market or provide our solutions.
We will also have to expand and enhance 22 Table of Contents the capabilities of our sales, relationship management, implementation, customer service, research and development, and other personnel to support our growth and continue to achieve high levels of customer service and satisfaction. Our success will depend on our ability to plan for and manage this growth effectively.
We also have to expand and enhance the capabilities of our sales, relationship management, implementation, customer service, research and development, and other personnel to support our growth and continue to achieve high levels of customer service and satisfaction. Our success depends on our ability to plan for and manage this growth effectively.
Additional financing may not be available on favorable terms, if at all. If adequate funds are not available on acceptable terms, we may be unable to invest in future growth opportunities, which could adversely affect our business and results of operations.
If adequate funds are not available on acceptable terms, we may be unable to invest in future growth opportunities, which could adversely affect our business and results of operations.
Based on the total number of shares of our common stock outstanding as of January 31, 2022, entities affiliated with Insight Partners (“Insight Partners”) holds approximately 36% of our total outstanding common stock.
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.
In addition, third-party licenses may expose us to increased risks, including risks associated with the integration of new technology, the diversion of resources from the development of our own proprietary technology, and our inability to generate revenues from new technology sufficient to offset associated acquisition and maintenance costs, all of which may increase our expenses and materially and adversely affect our business and results of operations. 23 Table of Contents We may fail to successfully expand internationally.
In addition, third-party licenses may expose us to increased risks, including risks associated with the integration of new technology, the diversion of resources from the development of our own proprietary technology, and our inability to generate revenues from new technology sufficient to offset associated acquisition and maintenance costs, all of which may increase our expenses and materially and adversely affect our business and results of operations.
If we incur debt, the lenders would have rights senior to holders of common stock to make claims on our assets, the terms of any debt could restrict our operations, and we may be unable to service or repay the debt.
If we incur debt, including under the revolving line of credit, the lenders would have rights senior to holders of common stock to make claims on our assets, and the terms of any future debt could restrict our operations, and we may be unable to service or repay the debt.
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 United States and where mechanisms for enforcement of intellectual 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 23 Table of Contents property rights may be weak.
Many of the provisions of the Tax Cuts and Jobs Act and CARES Act still require 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 25 Table of Contents guidance through the issuance and/or finalization of regulations by the U.S.
As part of the new requirements, we have established and maintain effective disclosure and financial controls and made 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.
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 a result of our limited operating history, our ability to forecast our future operating results, including revenues, cash flows, and profitability, is limited and subject to a number of uncertainties.
As a result of our limited operating history at the current scale of our business, our ability to forecast our future operating results, including revenues, cash flows, and profitability, is limited and subject to a number of uncertainties.
Our revenues increased from $138.2 million for fiscal 2020 to $204.3 million for fiscal 2021 to $273.9 million for fiscal 2022. Our revenues for fiscal 2022 include the revenues of SimpleNexus from the Acquisition Date. We may not be able to sustain revenue growth consistent with our recent history, if at all.
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.
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.
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.
Because our decision to issue securities in a future offering will depend on numerous considerations, including factors beyond our control, we cannot 27 Table of Contents predict or estimate the impact any future incurrence of debt or issuance of equity securities will have on us.
Because our decision to issue securities in a future offering will depend on numerous considerations, including factors beyond our control, we cannot predict or estimate the impact any future incurrence of debt or issuance of equity securities will have on us. Any future incurrence of debt or issuance of equity securities could adversely affect the value of our common stock.
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. We generally recognize subscription revenues ratably over the terms of our customer contracts, which typically range from three to five years.
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. We generally recognize subscription revenues ratably over the terms of our customer contracts.
As of January 31, 2022, we had 12 issued patents and one patent application pending relating to the nCino Bank Operating System in the United States.
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.
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.
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.
If our assumptions regarding these risks and uncertainties are incorrect or change due to changes in our markets, or if we do not address these risks successfully, our operating and financial results may differ materially from our expectations and our business may suffer. We have a history of operating losses and may not achieve or sustain profitability in the future.
If our assumptions regarding these risks and uncertainties are incorrect or change due to changes in our markets, or if we do not address these risks successfully, our operating and financial results may differ materially from our expectations and our business may suffer.
Federal Reserve changing interest rates may cause potential new customers and existing customers to forego or delay purchasing our solutions or reduce the amount of spend with us, which would materially and adversely affect our business.
Moreover, economic fluctuations caused by factors such as the U.S. Federal Reserve changing interest rates may cause potential new customers and existing customers to forego or delay purchasing our solutions or reduce the amount of spend with us, which would materially and adversely affect our business.
Our sales cycles are typically lengthy, generally ranging from six to 25 Table of Contents nine months for smaller financial institutions and twelve to eighteen months or more for larger financial institutions. We may spend substantial time, effort and money on our sales and marketing efforts without any assurance that our efforts will produce any sales.
Our sales cycles are typically lengthy, generally ranging from six to nine months for smaller FIs and 12 to 18 months or more for larger FIs. We may spend substantial time, effort and money on our sales and marketing efforts without any assurance that our efforts will produce any sales.
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.
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.
We have registered the “nCino” name and logo in the United States and certain other countries and we have registrations and/or pending applications for additional marks including the “Bank Operating System” and “nIQ” in the United States and certain other countries.
We have registered the “nCino” name and logo in the U.S. and certain other countries and we have registrations and/or pending applications for additional marks including “nIQ” in the U.S. and certain other countries.
General Risks Uncertain or weakened economic conditions, including as a result of COVID-19, 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 seemingly unrelated to us or our industry may adversely affect us.
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.
In addition, promoting and selling new and enhanced functionality may require increasingly costly sales and marketing efforts and if customers choose not to adopt this functionality, our business and results of operations could suffer.
As we create new applications and enhance our existing solutions, these applications and enhancements may not be attractive to customers. In addition, promoting and selling new and enhanced functionality may require increasingly costly sales and marketing efforts and if customers choose not to adopt this functionality, our business and results of operations could suffer.
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 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.
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 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.
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.
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.
Therefore, fluctuations in the value of the U.S. dollar and foreign currencies may impact our results of operations when translated into U.S. dollars. We do not currently engage in currency hedging activities to limit the risk of exchange rate fluctuations. The failure to attract and retain additional qualified personnel could prevent us from executing our business strategy.
We do not currently engage in currency hedging activities to limit the risk of exchange rate fluctuations. The failure to attract and retain additional qualified personnel could prevent us from executing our business strategy. We must attract and retain highly qualified personnel.
If any analyst who covers us or may cover us were to cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the trading price or trading volume of our common stock to decline. 31 Table of Contents Failure to maintain the adequacy of internal controls over financial reporting may adversely affect investor confidence in our company and, as a result, the value of our common stock.
If any analyst who covers us or may cover us were to cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the trading price or trading volume of our common stock to decline.
Since the average initial term of our customer agreements is three to five years, and we only began selling the nCino Bank Operating System in 2012, we have limited historical data with respect to rates of customer subscription renewals and cannot be certain of anticipated renewal rates.
The average initial term of our customer agreements is three to five years for the nCino Bank Operating System and one to three years for SimpleNexus. We have a limited operating history at the current scale of our business with respect to rates of customer subscription renewals and cannot be certain of anticipated renewal rates.
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.
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.

… 60 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

1 edited+2 added−10 removed0 unchanged
Biggest changeItem 2. Properties Our headquarters are located in Wilmington, North Carolina where, in addition to the square footage noted below, we occupy facilities encompassing approximately 57,000 square feet. SimpleNexus leases approximately 34,000 square feet of offices in Lehi, Utah which is being used as SimpleNexus' principal office space.
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.
Removed
We have additional domestic offices in Salt Lake City, Utah and Macon, Georgia. We also have international offices in London, Sydney, Melbourne, Toronto and Tokyo. All of our offices are leased, and we do not own any real property. These leases range in expiration from June 2023 to July 2028.
Added
The leases relating to approximately 180,000 square feet of those facilities plus an adjacent parking deck expire in October 2037, each with options to extend and a purchase option that expires if not exercised on or before November 30, 2026.
Removed
Subsequent to January 31, 2022, we entered into office leases in Madrid and Paris. In November 2020, we entered into a new lease agreement with a lessor for our primary headquarters property in Wilmington, North Carolina.
Added
We have additional domestic offices in the U.S. and international offices in the United Kingdom, Australia, Canada, Japan, Spain and France. All of our offices are leased, and we do not own any real property. We believe our facilities are adequate for our current needs. We believe that we will be able to obtain additional space on commercially reasonable terms.
Removed
As a result of a purchase option in the lease, the Company is deemed to have continuing involvement of our headquarters and accordingly, is considered for accounting purposes to be the owner. As such, we have excluded the square footage of approximately 90,000 square feet from the total leased space disclosed above.
Removed
The Company also entered into an agreement for a parking deck in January 2021 which was completed in September 2021, in addition to the existing headquarters property. The Company is also deemed to be the owner of the 648-space parking deck for accounting purposes.
Removed
In April 2021, the Company entered into a new lease agreement for the construction of an additional, approximately 90,000 square feet, office building that is on the property of our existing headquarters.
Removed
Due to the Company also being deemed to be the owner of the additional building for accounting purposes, the costs associated with the construction of the building will be capitalized as construction in progress with a corresponding construction liability throughout construction which is estimated to be approximately $24.0 million.
Removed
The costs of the construction in progress and corresponding construction liability are included in property and equipment, net and construction liability, noncurrent on the consolidated balance sheets, respectively. Upon completion of the building, the construction liability will be recorded as a financing obligation.
Removed
Upon expiration of the purchase options in the leases, the leases will be analyzed for applicable lease accounting. If the purchase options are not exercised, the leases will expire in 2037.
Removed
See Note 15 "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 for the full description. We believe our facilities are adequate for our current needs, but we may further expand as our employee base grows.
Removed
We believe that we will be able to obtain additional space on commercially reasonable terms.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

3 edited+5 added−1 removed4 unchanged
Biggest change("Apiture") not to solicit or hire each other’s employees in violation of Section 1 of the Sherman Act and N.C. Gen Stat. §§ 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.
Biggest change("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.
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 is seeking documents and information in connection with an investigation of the Company’s hiring and wage practices under U.S. federal antitrust laws.
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.
The complaint does not allege any specific 33 Table of Contents 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.
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
The Company has retained outside counsel and is fully cooperating with the authorities. Although there can be no assurance with respect to the outcome of this matter, the Company believes its hiring and wage practices do not violate antitrust laws.
Added
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
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.
Added
(f/k/a Penny HoldCo, Inc.) and nCINO OpCo, Inc. (f/k/a nCino, Inc.) v. INSIGHT VENTURE PARTNERS, LLC, et al., C.A.
Added
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.
Added
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.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+1 added−0 removed5 unchanged
Biggest changeThe graph assumes $100 was invested in our 35 Table of Contents common stock on July 14, 2020, the S&P 500 Index and the S&P 500 Application Software Index, and assumes reinvestment of any dividends. Comparison of Cumulative Total Return of nCino, Inc.
Biggest changeThe 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.
Stockholders As of January 31, 2022, there were 177 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, 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.
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, 2022 in comparison to the S&P 500 Index and the S&P 500 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, 2023 in comparison to the S&P 500 Index, the Russell 2000 Index, and the S&P 1500 Application Software Index.
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. Unregistered Sales of Equity Securities None. Issuer Purchases of Equity Securities None. Item 6. [Reserved]
We 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.
Added
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

99 edited+47 added−97 removed63 unchanged
Biggest changeFiscal Year Ended January 31, ($ in thousands, except share and per share amounts) 2020 2021 2022 Revenues: Subscription revenues $ 103,265 $ 162,439 $ 224,854 Professional services and other revenues 34,915 41,854 49,011 Total revenues 138,180 204,293 273,865 Cost of revenues: Cost of subscription revenues 31,062 47,969 64,508 Cost of professional services and other revenues 33,008 40,166 46,905 Total cost of revenues 64,070 88,135 111,413 Gross profit 74,110 116,158 162,452 Operating expenses: Sales and marketing 44,440 59,731 82,901 Research and development 35,304 58,263 79,363 General and administrative 22,536 40,772 71,545 Total operating expenses 102,280 158,766 233,809 Loss from operations (28,170) (42,608) (71,357) Non-operating income (expense): Interest income 988 361 194 Interest expense — (130) (1,514) Other income (expense), net 33 1,693 (1,277) Loss before income taxes (27,149) (40,684) (73,954) Income tax provision (benefit) 586 586 (23,833) Net loss (27,735) (41,270) (50,121) Net loss attributable to non-controlling interest (141) (1,130) (1,569) Adjustment attributable to non-controlling interest — 396 894 Net loss attributable to nCino, Inc. $ (27,594) $ (40,536) $ (49,446) Net loss per share attributable to nCino, Inc.: Basic and diluted $ (0.35) $ (0.46) $ (0.51) Weighted average number of common shares outstanding: Basic and diluted 78,316,794 87,678,323 96,722,464 43 Table of Contents The Company recognized stock-based compensation expense as follows: Fiscal Year Ended January 31, ($ in thousands) 2020 2021 2022 Cost of subscription revenues $ 277 $ 576 $ 960 Cost of professional services and other revenues 1,240 4,232 5,195 Sales and marketing 1,260 6,190 7,520 Research and development 1,245 5,463 6,186 General and administrative 1,723 8,747 8,616 Total stock-based compensation expense $ 5,745 $ 25,208 $ 28,477 The Company recognized amortization expense as follows: Fiscal Year Ended January 31, ($ in thousands) 2020 2021 2022 Cost of subscription revenues $ 697 $ 1,525 $ 2,604 Sales and marketing 937 1,670 2,303 General and administrative 114 10 — Total amortization expense $ 1,748 $ 3,205 $ 4,907 Fiscal Year Ended January 31, 2020 2021 2022 Revenues: Subscription revenues 74.7 % 79.5 % 82.1 % Professional services and other revenues 25.3 20.5 17.9 Total revenues 100.0 100.0 100.0 Cost of revenues (percentage shown in comparison to related revenues): Cost of subscription revenues 30.1 29.5 28.7 Cost of professional services and other revenues 94.5 96.0 95.7 Total cost of revenues 46.4 43.1 40.7 Gross profit 53.6 56.9 59.3 Operating expenses: Sales and marketing 32.2 29.2 30.3 Research and development 25.5 28.5 29.0 General and administrative 16.3 20.0 26.1 Total operating expenses 74.0 77.7 85.4 Loss from operations (20.4) (20.8) (26.1) Non-operating income (expense): Interest income 0.7 0.2 0.1 Interest expense — (0.1) (0.6) Other income (expense), net — 0.8 (0.5) Loss before income taxes (19.7) (19.9) (27.1) Income tax provision (benefit) 0.4 0.3 (8.7) Net loss (20.1) % (20.2) % (18.4) % 44 Table of Contents Comparison of the Fiscal Years Ended January 31, 2021 and 2022 Revenues Fiscal Year Ended January 31, ($ in thousands) 2021 2022 Revenues: Subscription revenues $ 162,439 79.5 % $ 224,854 82.1 % Professional services and other revenues 41,854 20.5 49,011 17.9 Total revenues $ 204,293 100.0 % $ 273,865 100.0 % Subscription Revenues Subscription revenues increased $62.4 million for fiscal 2022 compared to fiscal 2021, due to initial revenues from customers who did not contribute to subscription revenues during the prior period, including customers added as a result of our acquisition of SimpleNexus, and growth from existing customers within and across lines of business.
Biggest changeFiscal Year Ended January 31, ($ 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.
To date, our losses on professional services contracts have not been material. During the initial go-live period for a customer on the nCino Bank Operating System, professional services revenues make up a substantial portion of our revenues from that customer, whereas over time, revenues from established customers are more heavily weighted to subscriptions.
To date, our losses on professional services contracts have not been material. During the initial go-live period for a customer on the nCino Bank Operating System, professional services revenues generally make up a substantial portion of our revenues from that customer, whereas over time, revenues from established customers are more heavily weighted to subscriptions.
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 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 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.
As a result, during the initial go-live period for a customer on the nCino Bank Operating System, professional services revenues make up a substantial portion of our revenues from that customer, whereas over time, revenues from established customers are more heavily weighted to subscriptions.
As a result, during the initial go-live period for a customer on the nCino Bank Operating System, professional services revenues generally make up a substantial portion of our revenues from that customer, whereas over time, revenues from established customers are more heavily weighted to subscriptions.
Cost of subscription revenues primarily consists of fees paid to Salesforce for access to the Salesforce Platform, including Salesforce’s hosting infrastructure and data center operations, along with certain integration fees paid to other third parties. When we resell access to Salesforce’s CRM solution, cost of subscription revenues also includes the subscription fees we remit to Salesforce for providing such access.
Cost of subscription revenues consists of fees paid to Salesforce for access to the Salesforce Platform, including Salesforce’s hosting infrastructure and data center operations, along with certain integration fees paid to other third parties. When we resell access to Salesforce’s CRM solution, cost of subscription revenues also includes the subscription fees we remit to Salesforce for providing such access.
Non-cash charges primarily consisted of stock-based compensation, deferred income taxes, depreciation and amortization, amortization of costs capitalized to obtain revenue contracts, noncash operating lease costs, and foreign currency losses related to intercompany loans and transactions.
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.
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; • Determination of the transaction price; 53 Table of Contents • 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.
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.
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, 38 Table of Contents 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 .
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 .
Net Cash Used in Investing Activities 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.
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.
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. 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. 38 Table of Contents Operating Expenses Sales and Marketing.
Contractual Obligations and Commitments Our estimated future obligations principally consist of leases related to our facilities, purchase obligations related primarily to licenses and hosting services, and financing obligations for leases for which we are considered the owners for accounting purposes.
Contractual Obligations and Commitments Our estimated future obligations principally consist of leases related to our facilities, purchase obligations related primarily to licenses and hosting services, financing obligations for leases for which we are considered the owners for accounting purposes, and the Credit Facility.
Subscription Revenues . 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 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 37 Table of Contents typically range from three to five years for the nCino Bank Operating System and one to three years for SimpleNexus.
There is no assurance we would be able to obtain future financing on acceptable terms or at all. nCino K.K. In fiscal 2020, we established nCino K.K., a Japanese company in which we own a controlling interest, for purposes of facilitating our entry into the Japanese market.
There is no assurance we would be able to obtain future financing on acceptable terms or at all. 46 Table of Contents nCino K.K. In fiscal 2020, we established nCino K.K., a Japanese company in which we own a controlling interest, for purposes of facilitating our entry into the Japanese market.
Our success in growing our customer base and expanding adoption of our solutions by existing customers requires a focused direct sales engagement and the ability to convince key decision makers at financial institutions to replace legacy third-party point solutions or internally developed software with our solutions.
Our success in growing our customer base and expanding adoption of our solutions by existing customers requires a focused direct sales engagement and the ability to convince key decision makers at FIs to replace legacy third-party point solutions or internally developed software with our solutions.
We initially focused the nCino Bank Operating System on transforming commercial and small business lending for community and regional banks. We introduced this solution to enterprise banks in the United States in 2014, and then internationally in 2017, and have subsequently expanded across North America, Europe, and APAC.
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 Company is subject to income tax in the United States, multiple state and local jurisdictions and various foreign countries. The tax laws and regulations in each jurisdiction may be interpreted differently in certain situations, which could result in differing financial results. The Company is required to exercise judgement regarding the application of these tax laws and regulations.
The Company is subject to income tax in the U.S., multiple state and local jurisdictions and various foreign countries. The tax laws and regulations in each jurisdiction may be interpreted differently in certain situations, which could result in differing financial results. The Company is required to exercise judgement regarding the application of these tax laws and regulations.
Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of spending to support research and development efforts to enhance the nCino Bank Operating System and introduce new applications, market acceptance of our solutions, the continued expansion of our sales and marketing activities, investments in office facilities and other capital expenditure requirements, and any potential future acquisitions.
Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of spending to support research and development efforts to enhance the nCino Bank Operating System and introduce new applications, market acceptance of our solutions, the continued expansion of our sales and marketing activities, capital expenditure requirements, and any potential future acquisitions.
Specifically, we offer: • Client onboarding, loan origination, and deposit account opening applications targeted at a financial institution’s commercial, small business, and retail lines of business, for which we generally charge on a per seat basis. • nIQ, first introduced in fiscal 2020, for which we generally charge based on the asset size of the customer or on a usage basis. • Through SimpleNexus, 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 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 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.
We may from time-to-time seek to raise additional capital to support our growth. 51 Table of Contents 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.
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.
Interest expense consists primarily of interest related to our financing obligations. Other Income (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 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).
While we expect ACV-based net retention to increase over time for each respective cohort as we execute our land and expand strategy, occasionally ACV-based net retention can moderate from one period to the next, from customer consolidation for example. 39 Table of Contents The graphic below illustrates our ACV-based net retention for customers initially signed since fiscal 2013, excluding SimpleNexus ACV for comparability.
While we expect ACV-based net retention to increase over time for each respective cohort as we execute our land and expand strategy, occasionally ACV-based net retention can moderate from one period to the next, from customer consolidation for example. The graphic below illustrates our ACV-based net retention for customers initially signed since fiscal 2013.
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. Any subscription arrangements that are cancelable generally have penalty clauses.
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.
Professional services and other revenues consist of fees for implementation and configuration assistance, training, and advisory services. For enterprise and larger regional financial institutions, we generally work with SIs to provide the majority of implementation services for the nCino Bank Operating System, for which these SIs bill our customers directly.
Professional services and other revenues consist of fees for implementation and configuration assistance, training, and advisory services. For enterprise and larger regional FIs, we generally work with SI partners to provide the majority of implementation services for the nCino Bank Operating System, for which these SI partners bill our customers directly.
Income Tax Provision (Benefit) Fiscal Year Ended January 31, ($ in thousands) 2021 2022 Income tax provision (benefit) $ 586 0.3 % $ (23,833) (8.7) % Income tax benefit was $23.8 million for fiscal 2022 compared to a provision of $0.6 million for fiscal 2021 and resulted in an effective tax rate of 32.2% compared to (1.4)% in the prior fiscal year.
Income Tax Provision (Benefit) Fiscal Year Ended January 31, ($ 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.
In addition, our advanced billing and collection coupled with our recent growth has resulted in our cash used in operating activities generally being less than our net operating losses in recent periods. On February 11, 2022, we entered into a credit agreement for a senior secured revolving credit facility of up to $50.0 million.
In addition, our advanced billing and collection coupled with our recent growth has resulted in our cash used in operating activities generally being less than our net operating losses in recent periods. On February 11, 2022, we entered into the Credit Facility of up to $50.0 million.
We believe that current cash and cash equivalents as well as borrowings available under the revolving credit facility that we entered into in February 2022 will be sufficient to fund our operations and capital requirements for at least the next 12 months.
We believe that current cash and cash equivalents as well as borrowings available under the Credit Facility will be sufficient to fund our operations and capital requirements for at least the next 12 months.
Of the increase, 78.6% 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, 15.6% was attributable to initial revenues from customers who did not contribute to subscription revenues during the prior period, and 5.9% was attributable to revenues from SimpleNexus.
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.
The cash generated by working capital accounts was partially offset by a $13.5 million increase in accounts receivable due to the timing of collections from customers, payments of $11.0 million of capitalized costs to obtain revenue contracts, which consisted primarily of sales commissions, a decrease of $2.6 million in operating lease liabilities, and a $2.5 million increase in prepaid expenses and other assets.
The cash generated by working capital accounts was partially offset by an increase of $13.5 million in accounts receivable due to the timing of billings and collections from customers, an increase of $11.0 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 $2.6 million in operating lease liabilities, and a $2.5 million increase in prepaid expenses and other assets.
We used a majority of the proceeds which were in our cash and cash equivalents on the balance sheet to consummate the acquisition of SimpleNexus. We generally bill and collect from our customers annually in advance.
We used a majority of the proceeds from our initial public offering in July 2020, which were in our cash and cash equivalents on the balance sheet, to consummate the acquisition of SimpleNexus in January 2022. We generally bill and collect from our customers annually in advance.
In addition, growing our customer base will require us to increasingly penetrate markets outside the United States, which markets accounted for 15.9% of total revenues for fiscal 2022. For new customers, our sales cycles are typically lengthy, generally ranging from six to nine months for smaller financial institutions to 12 to 18 months or more for larger financial institutions.
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.
At January 31, 2022, 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 $109.0 million against our deferred tax assets of $157.3 million as of that date.
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.
We expect the cost of subscription revenues will continue to increase in absolute dollars as the number of users of the nCino Bank Operating System grows. 48 Table of Contents Cost of Professional Services and Other Revenues Cost of professional services and other revenues increased $7.2 million for fiscal 2021 compared to fiscal 2020, generating a gross margin for professional services and other revenues of 4.0% compared to a gross margin of 5.5% for fiscal 2020.
We expect the cost of subscription revenues will continue to increase in absolute dollars as the number of users of the nCino Bank Operating System grows. 42 Table of Contents Cost of Professional Services and Other Revenues Cost of professional services and other revenues increased $16.4 million for fiscal 2023 compared to fiscal 2022, generating a gross margin for professional services and other revenues of 0.3% compared to a gross margin of 4.3% for fiscal 2022.
In the future, we expect further moderation to the extent we continue to experience rapid growth. In addition, because larger financial institutions tend to make more sizable purchases with longer activation schedules, we expect variability in our subscription revenue retention rates based on the timing and extent of our continued penetration of this portion of the market.
In addition, because larger FIs tend to make more sizable purchases with longer activation schedules, we expect variability in our subscription revenue retention rates based on the timing and extent of our continued penetration of this portion of the market.
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 for SimpleNexus, and expenses related to the Antitrust Matters.
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.
See Note 18 "Subsequent Event" 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. Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with GAAP.
See Note 14 "Leases," Note 15 "Revolving Credit Facility," and 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 for more information. Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with GAAP.
While we use our best estimates and assumptions, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill.
As a result, during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill.
The transaction price is allocated to the separate performance obligations on a relative standalone selling price (“SSP”) basis. We determine SSP by considering its overall pricing objectives and market conditions.
For these contracts, we account for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price (“SSP”) basis. We determine SSP by considering its overall pricing objectives and market conditions.
Professional Services and Other Revenues Professional services and other revenues increased $7.2 million for fiscal 2022 compared to fiscal 2021, 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.
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.
The following tables present our selected consolidated statements of operations data for fiscal 2020, 2021, and 2022 in both dollars and as a percentage of total revenues, except as noted.
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.
As such, to capitalize on the market opportunity we see ahead of us, we 40 Table of Contents expect to continue to optimize our operating plans for revenue growth, and as a result continue experiencing operating losses, for the foreseeable future. Components of Results of Operations Revenues We derive our revenues from subscription and professional services and other revenues.
To capitalize on the market opportunity we see ahead of us, we expect to continue to optimize our operating plans for revenue growth and profitability. Components of Results of Operations Revenues We derive our revenues from subscription and professional services and other revenues. Subscription Revenues .
In addition, cost of subscription revenues 41 Table of Contents include personnel-related costs associated with delivering maintenance and support services, including salaries, benefits and stock-based compensation expense, travel and related costs, amortization of acquired developed technology, and allocated overhead.
We also incur costs associated with access to other platforms. In addition, cost of subscription revenues includes personnel-related costs associated with delivering maintenance and support services, including salaries, benefits and stock-based compensation expense, travel and related costs, amortization of acquired developed technology, and allocated overhead.
The effective tax rate was (1.4)% for fiscal 2021 compared to (2.2)% in the prior fiscal year. Non-GAAP Financial Measure In addition to providing financial measurements based on generally accepted accounting principles in the United States of America ("GAAP"), we provide an additional financial metric that is not prepared in accordance with GAAP ("non-GAAP").
Non-GAAP Financial Measure In addition to providing financial measurements based on generally accepted accounting principles in the United States of America ("GAAP"), we provide an additional financial metric that is not prepared in accordance with GAAP ("non-GAAP").
Subscription revenues were 82.1% of total revenues for fiscal 2022 compared to 79.5% of total revenues for fiscal 2021, primarily due to growth in our installed base.
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.
Costs related to Salesforce user fees increased $10.8 million as we continued to add new customers and sell additional functionality to existing customers, and personnel costs increased $3.2 million as we added new employees. Other costs of subscription revenues increased $1.1 million due to other data center costs .
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.
Third party professional fees increased $20.4 million for fiscal 2022 compared to the fiscal 2021, mainly attributable to a $10.3 million increase in 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") and approximately $10.0 million related to the acquisition of SimpleNexus.
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.
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.
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 drew an amount of $20.0 million under such credit facility in February 2022. See Note 18 "Subsequent Event" 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" 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.
Non-cash charges primarily consisted of stock-based compensation, depreciation and amortization, and amortization of costs capitalized to obtain revenue contracts, partially offset by foreign currency gains 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, foreign currency losses related to intercompany loans and transactions, deferred income taxes, and provision for bad debt.
Sales and marketing expenses also include outside consulting fees, marketing programs, including lead generation, costs of our annual user conference, advertising, trade shows, other event expenses, amortization of intangible assets, and allocated overhead.
Sales and marketing expenses also include outside consulting fees, marketing programs, including lead generation, costs of our annual user conference, advertising, trade shows, other event expenses, amortization of intangible assets, and allocated overhead. We expect sales and marketing expenses will decrease as a percentage of revenues as we leverage the investments we have made to date. Research and Development.
The initial deployment of our solutions by our customers requires a period of implementation and configuration services that can generally range from as little as three months to over 18 months for global financial institutions.
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 increase in cost of professional services and other revenues also included an increase of $0.4 million in allocated overhead costs due to growth supporting our continued business expansion and an increase of $0.4 45 Table of Contents million in third party professional fees.
The increase in cost of subscription revenues also included an increase of $0.8 million in allocated overhead costs due to growth supporting our continued business expansion.
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.
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.
Our future growth depends on our ability to expand our reach to new financial institution customers and increase adoption with existing customers as they broaden their use of our solutions within and across lines of business.
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.
We used $4.3 million in investing activities in fiscal 2021 for the purchase of property and equipment and leasehold improvements to support the expansion of our business. 52 Table of Contents Net Cash Provided by Financing Activities The $15.9 million provided by financing activities in fiscal 2022 comprised principally of $13.9 million of proceeds from the exercise of stock options and $2.5 million in proceeds from stock issuances under the employee stock purchase plan, partially reduced by stock issuance costs of $0.2 million for shares issued in consideration for the SimpleNexus acquisition and principal payments of $0.3 million on a financing obligation for a lease arrangement that we are considered the owners for accounting purposes.
The $15.9 million provided by financing activities in fiscal 2022 comprised principally of $13.9 million of proceeds from the exercise of stock options and $2.5 million in proceeds from stock issuances under the employee stock purchase plan, partially reduced by stock issuance costs of $0.2 million for shares issued in consideration for the SimpleNexus acquisition, and principal payments of $0.3 million on the financing obligation.
Our subscription revenues in fiscal 2020 were $103.3 million or 74.7% of total revenues, $162.4 million or 79.5% of total revenues in fiscal 2021, and $224.9 million or 82.1% of total revenues in fiscal 2022, representing a 47.6% compound annual growth rate. Our subscription-based revenues include $3.7 million from SimpleNexus from the Acquisition Date.
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.
Determining the useful life of an intangible asset also requires judgment as different types of intangible assets have different lives. 54 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.
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.
On the Acquisition Date, we acquired SimpleNexus, a leading cloud-based mobile-first homeownership software company in the United States, for an aggregate purchase price of $933.6 million. As a result of the acquisition, SimpleNexus became a wholly owned subsidiary of nCino, Inc. Our consolidated results of operations for fiscal 2022 include the operating results of SimpleNexus from the Acquisition Date.
As a result, we expect the mix of our total revenues to become more heavily weighted toward subscription revenues. On the Acquisition Date, we acquired SimpleNexus, a leading cloud-based mobile-first homeownership software company in the U.S., for an aggregate purchase price of $933.6 million. As a result of the acquisition, SimpleNexus became a wholly owned subsidiary of nCino, Inc.
Fiscal Year Ended January 31, ($ in thousands) 2020 2021 2022 Net cash provided by (used in) operating activities $ (8,998) $ 9,222 $ (19,229) Net cash used in investing activities (58,027) (4,338) (278,488) Net cash provided by financing activities 84,091 274,121 15,922 Net Cash Provided by (Used in) Operating Activities The $19.2 million we used in operating activities in fiscal 2022 was driven by our net loss of $50.1 million, partially offset by $24.5 million in a non-cash benefit and $6.4 million generated by changes in working capital accounts.
Fiscal Year Ended January 31, ($ 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.
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. As our installed base and associated subscription revenues expanded in recent years, we have seen some moderation of our subscription revenue retention rate.
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.
The $9.2 million provided by operating activities in fiscal 2021 reflects our net loss of $41.3 million, offset by $35.9 million in non-cash charges and $14.6 million generated by changes in working capital accounts.
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 $6.4 million generated by changes in working capital accounts.
Business Combinations We use our best estimates and assumptions to assign fair value to tangible and intangible assets acquired and liabilities assumed at the acquisition date. The excess of the purchase price over the fair value of net assets acquired is recorded as goodwill.
The excess of the purchase price over the fair value of net assets acquired is recorded as goodwill. While we use our best estimates and assumptions, our estimates are inherently uncertain and subject to refinement.
Cost of Revenues and Gross Margin Fiscal Year Ended January 31, ($ in thousands) 2021 2022 Cost of revenues (percentage shown in comparison to related revenues): Cost of subscription revenues $ 47,969 29.5 % $ 64,508 28.7 % Cost of professional services and other revenues 40,166 96.0 46,905 95.7 Total cost of revenues $ 88,135 43.1 $ 111,413 40.7 Gross profit $ 116,158 56.9 % $ 162,452 59.3 % Cost of Subscription Revenues Cost of subscription revenues increased $16.5 million for fiscal 2022 compared to fiscal 2021, generating a gross margin for subscription revenues of 71.3% compared to a gross margin of 70.5% for fiscal 2021.
Cost of Revenues and Gross Margin Fiscal Year Ended January 31, ($ 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.
General and administrative expenses consist primarily of salaries, benefits and stock-based compensation associated with our executive, finance, legal, human resources, information technology, compliance and other administrative personnel.
We expect research and development costs will decrease as a percentage of revenues as we leverage the investments we have made to date. General and Administrative. General and administrative expenses consist primarily of salaries, benefits and stock-based compensation associated with our executive, finance, legal, human resources, information technology, compliance and other administrative personnel.
General and administrative expenses also include accounting, auditing and legal professional services fees, travel and other corporate-related expenses, and allocated overhead, as well as acquisition-related expenses, which primarily consists of third-party expenses related to the acquisition of SimpleNexus, such as legal and other professional services fees.
General and administrative expenses also include accounting, auditing and legal professional services fees, travel and other corporate-related expenses, and allocated overhead, as well as acquisition-related expenses, such as legal and other professional services fees. We expect general and administrative expenses will decrease as a percentage of revenues as we leverage the investments we have made to date.
For U.S. income tax purposes, the option to currently deduct research and development expenditures is no longer available and requires taxpayers to capitalize and amortize these expenditures over either a five- or fifteen-year period. 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.
For U.S. income tax purposes, the option to deduct research and development expenditures is no longer available and thus requires us to capitalize and amortize these expenditures over either a five- or fifteen-year period.
Reaching and converting potential customers requires that we continue to invest in the growth and success of our sales force both in the United States and internationally. In addition, key to landing new customers is our ability to successfully take our existing customers live and help them achieve measurable returns on their investment, thereby turning them into referenceable accounts.
Key to landing new customers is our ability to successfully take our existing customers live and help them achieve measurable returns on their investment, thereby turning them into referenceable accounts.
Professional Services and Other Revenues Professional services and other revenues primarily consist of fees for deployment, configuration, and optimization services, as well as training. The majority of our professional services contracts are billed on a fixed price basis, and revenues are recognized over time based on a proportional performance methodology which utilizes input methods.
The majority of our professional services contracts revenues are recognized over time based on a proportional performance methodology which utilizes input methods. Professional services contracts are billed on a time and materials or fixed fee basis. Contracts with Multiple Performance Obligations Most of our contracts with customers contain multiple performance obligations.
Due to our continuing investment in growth, we recorded net losses attributable to nCino in fiscal 2020, 2021, and 2022 of $27.6 million, $40.5 million, and $49.4 million, respectively. Our net loss for fiscal 2022 includes $3.6 million in net losses from SimpleNexus from the Acquisition Date. Factors Affecting Our Operating Results Market Adoption of Our Solution .
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 $102.7 million, respectively.
Operating Expenses Fiscal Year Ended January 31, ($ in thousands) 2021 2022 Operating expenses: Sales and marketing $ 59,731 29.2 % $ 82,901 30.3 % Research and development 58,263 28.5 79,363 29.0 General and administrative 40,772 20.0 71,545 26.1 Total operating expenses 158,766 77.7 233,809 85.4 Loss from operations $ (42,608) (20.8) % $ (71,357) (26.1) % Sales and Marketing Sales and marketing expenses increased $23.2 million for fiscal 2022 compared to fiscal 2021, primarily due to an increase of $18.2 million in personnel costs resulting mainly from an increase in headcount on the sales and marketing teams.
Operating Expenses Fiscal Year Ended January 31, ($ in thousands) 2022 2023 Operating expenses: Sales and marketing $ 82,901 30.3 % $ 127,669 31.3 % Research and development 79,363 29.0 121,576 29.8 General and administrative 71,545 26.1 83,477 20.4 Total operating expenses 233,809 85.4 332,722 81.5 Loss from operations $ (71,357) (26.1) % $ (94,013) (23.0) % Sales and Marketing Sales and marketing expenses increased $44.8 million for fiscal 2023 compared to fiscal 2022, primarily due to an increase of $24.9 million in personnel costs, including stock-based compensation expense, mainly from an increase in average headcount, including headcount from the acquisition of SimpleNexus contributing for a full year in fiscal 2023 compared to less than a month in fiscal 2022.
The cash generated by working capital accounts was partially offset by an increase of $11.4 million in accounts receivable due to the timing of collections from customers, payments of $9.0 million of capitalized costs to obtain revenue contracts, which consisted primarily of sales commissions, and a $3.3 million increase in prepaid expenses and other assets.
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.
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. We expect to continue to incur operating losses for the foreseeable future.
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.
Also contributing to the increase in personnel costs was expatriate tax equalization expenses of $2.7 million. Amortization expense for acquired customer relationships and trade name increased $0.6 million related to the acquisition of SimpleNexus.
Amortization expense for acquired customer relationships and trade name increased $8.8 million related to the acquisition of SimpleNexus.
Cash generated by working capital accounts was principally a function of a $30.3 million increase in deferred revenue as we expanded our customer base and renewed existing customers, a $6.7 million increase in accrued expenses and other current liabilities, and a $1.3 million increase in accounts payable.
The cash used in working capital accounts was partially offset by a $33.5 million increase in deferred revenue, as we expanded our customer base and renewed existing customers.
See Note 14 "Leases" and Note 15 "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 for more information. On February 11, 2022, we entered into a credit agreement for a senior secured revolving credit facility of up to $50.0 million.
See Note 19 "Restructuring" of the notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for more information.
See Note 7 "Business Combinations" of the notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information. SimpleNexus offers a suite of products that enables loan officers, borrowers, real estate agents, settlement agents and others to easily engage in the homeownership process from any internet-enabled device.
Our consolidated results of operations for fiscal 2022 and 2023 include the operating results of SimpleNexus from the Acquisition Date. See Note 7 "Business Combinations" of the notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information.
The following table reconciles non-GAAP operating loss to loss from operations, the most directly comparable financial measure, calculated and presented in accordance with GAAP (in thousands): Fiscal Year Ended January 31, ($ in thousands) 2020 2021 2022 GAAP loss from operations $ (28,170) $ (42,608) $ (71,357) Adjustments Amortization of intangible assets 1,748 3,205 4,907 Stock-based compensation expense 5,745 25,208 28,477 Acquisition-related expenses — — 10,006 Fees and expenses related to the Antitrust Matters — — 10,326 Total adjustments 7,493 28,413 53,716 Non-GAAP operating loss $ (20,677) $ (14,195) $ (17,641) Liquidity and Capital Resources As of January 31, 2022, we had $88.0 million in cash and cash equivalents, and an accumulated deficit of $209.6 million.
In addition, other companies may use other measures to evaluate their performance, or may calculate non-GAAP measures differently, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. 45 Table of Contents The following table reconciles non-GAAP operating loss to loss from operations, the most directly comparable financial measure, calculated and presented in accordance with GAAP (in thousands): Fiscal Year Ended January 31, ($ 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.
For example, references in this Annual Report on Form 10-K to "fiscal 2022" refer to the fiscal year ended January 31, 2022. 36 Table of Contents Overview nCino is a leading global provider of cloud-based software for financial institutions.
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 increase in sales and marketing expenses also included a $1.1 million increase in allocated overhead costs and a $0.7 million increase in outside consulting fees due to growth supporting our continued business expansion.
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.
Third party professional fees increased $2.5 million for fiscal 2021 compared to the fiscal 2020, attributable to an increase of contract research and development spend. The increase in research and development expenses for fiscal 2021 was partially offset by a decrease of $0.4 million in travel costs due to COVID-19-related travel restrictions.
The increase in research and development expenses also included an increase of $3.9 million in allocated overhead costs due to growth supporting our continued business expansion and an increase of $1.0 million in travel-related costs, partially offset by a $4.0 million decrease in third party professional fees as a result of lower contract research and development spend.
Without the effect of the additional stock-based compensation expense, our professional services and other gross margin increase for fiscal 2021 was primarily due to the decrease in aforementioned non-reimbursable travel and effective billing rates.
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.

… 163 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+2 added−0 removed3 unchanged
Biggest changeForeign Currency Exchange Risk Our reporting currency is the U.S. dollar and the functional currency of each of our subsidiaries is its local currency. The assets and liabilities of each of our subsidiaries are translated into U.S. dollars at exchange rates in effect at each balance sheet date.
Biggest changeThe assets and liabilities of each of our subsidiaries are translated into U.S. dollars at exchange rates in effect at each balance sheet date. Revenues and expenses are translated using the average exchange rate for the relevant period. Equity transactions are translated using historical exchange rates.
We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. 56 Table of Contents On February 11, 2022, we entered into a senior secured revolving credit facility of up to $50.0 million.
We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. On February 11, 2022, we entered into a senior secured revolving credit facility of up to $50.0 million.
Our market risk exposure is primarily the result of fluctuations in interest rates and foreign currency exchange rates. Interest Rate Risk At January 31, 2022, we had cash, cash equivalents and restricted cash of $88.4 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, 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.
We have not engaged in hedging of foreign currency transactions to date, although we may choose to do so in the future. 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. 57 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. 51 Table of Contents
Revenues and expenses are translated using the average exchange rate for the relevant period. Equity transactions are translated using historical exchange rates. Decreases in the relative value of the U.S. dollar to other currencies may negatively affect revenues and other operating results as expressed in U.S. dollars.
Decreases in the relative value of the U.S. dollar to other currencies may negatively affect revenues and other operating results as expressed in U.S. dollars. Foreign currency translation adjustments are accounted for as a component of accumulated other comprehensive income (loss) within stockholders’ equity.
Foreign currency translation adjustments are accounted for as a component of accumulated other comprehensive income (loss) within stockholders’ equity. Gains or losses due to transactions in foreign currencies are included in “Non-operating income (expense), Other” in our consolidated statements of operations. Furthermore, our customers outside of the United States typically pay us in local currency.
Gains or losses due to transactions in foreign currencies are included in non-operating income (expense), other in our consolidated statements of operations. Furthermore, our customers outside of the U.S. typically pay us in local currency. We have not engaged in hedging of foreign currency transactions to date, although we may choose to do so in the future.
As a result, we are exposed to increased interest rate risk as we make draws. See Note 18, "Subsequent Event" 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 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 additional information. Foreign Currency Exchange Risk Our reporting currency is the U.S. dollar and the functional currency of each of our subsidiaries is its local currency.
Added
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
A 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.

Other NCNO 10-K year-over-year comparisons