Last Update28 Aug 25Fair value Increased 9.93%
nCino’s price target has been raised to $35.18 as stronger-than-expected Q2 results, accelerating subscription growth, strategic expansion initiatives, and increasing confidence in margin improvement outweigh valuation concerns and near-term reacceleration risks.
Analyst Commentary
- Positive Q2 results with subscription revenue and profit exceeding expectations, notably driven by better-than-expected mortgage volumes and strong execution, supporting upward estimate revisions.
- Bullish analysts cite reacceleration initiatives—including expanded EMEA focus, renewed credit union market efforts, and cross-selling (especially mortgage)—plus momentum from new product launches and updated pricing strategy.
- Several firms highlight organic subscription revenue growth acceleration (10–22%), improved FY26 guidance, and a consistent history of “beat and raise,” but note that a more durable double-digit growth trajectory is needed for continued multiple expansion.
- A growing confidence in banking software sector rebound, visibility on margin model improvement, and the potential for applied AI to drive higher win rates, yet risk/reward seen as more balanced after shares' recent appreciation and fuller valuation.
- Some cautious tones remain from neutral or bearish analysts citing valuation concerns, second-half comp dynamics limiting further reacceleration until FY27, and company-specific uncertainties during a transition year.
What's in the News
- Keefe Bruyette raised nCino’s price target to $34.50 (from $33) and maintained an Outperform rating, highlighting a strong quarter with subscription revenue 3% above the high end of guidance, while noting current stock valuation appears full (Periodicals).
- nCino issued Q3 2025 guidance for total revenues of $146–$148 million and subscription revenues of $127.5–$129.5 million; full fiscal 2026 guidance set at total revenues of $585–$589 million and subscription revenues of $513.5–$517.5 million (Key Developments).
- The company repurchased 743,669 shares (0.65%) for $19.99 million during May 1 to July 31, 2025, completing the buyback of 2,572,782 shares (2.22%) for $60.55 million under its April 2025 authorization (Key Developments).
- At the June 2025 AGM, shareholders approved an amendment phasing out the classified board and instituting annual director elections, effective immediately (Key Developments).
- Analysts cite nCino’s consistent performance in exceeding forecasts (“beat-and-raise story”) as supporting higher estimates, though valuation is becoming more challenging at current share prices (Periodicals).
Valuation Changes
Summary of Valuation Changes for nCino
- The Consensus Analyst Price Target has risen from $32.00 to $35.18.
- The Net Profit Margin for nCino has significantly risen from 2.95% to 7.27%.
- The Future P/E for nCino has significantly fallen from 222.06x to 98.83x.
Key Takeaways
- Strong demand for AI-driven automation and cloud-native platforms is driving customer growth, pricing power, and expanded revenue opportunities.
- Platform expansion, global market penetration, and outcome-based pricing are boosting cross-sell, growth visibility, and margin improvement.
- Heightened competition, product concentration, international expansion challenges, ongoing high investment, and regulatory risks all threaten nCino's growth, margins, and global diversification efforts.
Catalysts
About nCino- A software-as-a-service company, provides software solutions to financial institutions in the United States, the United Kingdom, and internationally.
- The accelerating adoption of AI-driven intelligent automation in banking is creating strong customer demand for nCino's Banking Advisor, which is already being adopted by 80+ customers and cited as a meaningful differentiator in winning deals, driving forward-looking uplift in subscription revenue and pricing power.
- A large-scale shift by banks and credit unions from legacy, fragmented IT infrastructure to cloud-native, end-to-end SaaS core banking platforms is leading to ongoing net new customer growth and major expansions, evidenced by wins with top U.S. and European banks-supporting sustained revenue and ACV growth.
- Expanding the nCino platform's capabilities beyond core loan origination-into onboarding, analytics, commercial pricing, and incentive compensation-provides robust cross-sell/up-sell opportunities, increasing average contract value and driving both top line revenue and margin expansion over time.
- Early success in underpenetrated international markets (notably Continental Europe, including first wins and successful go-lives) and the full integration of acquired assets (FullCircl, Sandbox Banking) are set to accelerate international growth rates and diversify revenue streams, improving growth visibility and reducing market concentration risk.
- The transition to a new outcome-based/pricing model that's gaining customer acceptance-often pulled forward by demand for embedded AI-enables price uplifts (targeted at 10%), faster renewal cycles, and improved gross margins, all of which are likely to positively impact net earnings.
nCino Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming nCino's revenue will grow by 8.0% annually over the next 3 years.
- Analysts assume that profit margins will increase from -5.3% today to 3.0% in 3 years time.
- Analysts expect earnings to reach $20.7 million (and earnings per share of $0.26) by about August 2028, up from $-29.3 million today.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 222.1x on those 2028 earnings, up from -112.7x today. This future PE is greater than the current PE for the US Software industry at 35.0x.
- Analysts expect the number of shares outstanding to decline by 0.67% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 8.65%, as per the Simply Wall St company report.
nCino Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- Intensifying competition from both large cloud providers (Microsoft, Amazon, Google) and a crowded fintech ecosystem could pressure nCino's market share and pricing power, limiting revenue growth and margin expansion over time.
- Heavy dependence on core loan origination and mortgage products, with only gradual adoption of the new platform and AI-based solutions, exposes nCino to product concentration risk; if banks pivot to broader or next-gen alternatives, revenue growth could stagnate.
- Slower-than-anticipated international expansion, especially in EMEA and APAC, poses a risk of ongoing revenue concentration in the saturated North American market, which may impede long-term revenue diversification and global growth.
- Margin compression risk persists due to ongoing high investment in product integration (e.g., FullCircl, Sandbox Banking), R&D to develop AI capabilities, and the need for aggressive innovation, which could restrain operating earnings and net margins.
- Regulatory complexity and heightened data security requirements (especially with global growth ambitions) create the risk of increased compliance costs and potential for security incidents, both of which could negatively impact net margins and customer trust.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $32.0 for nCino based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $38.0, and the most bearish reporting a price target of just $27.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $700.8 million, earnings will come to $20.7 million, and it would be trading on a PE ratio of 222.1x, assuming you use a discount rate of 8.7%.
- Given the current share price of $28.69, the analyst price target of $32.0 is 10.3% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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