NCNO: Q3 Beat And Raise Setup May Drive Future Multiple Expansion

Narrative Update

The analyst price target for nCino has been trimmed by about US$0.64 to reflect slightly lower fair value. Analysts still highlight what they see as an achievable near term setup, a potential Q3 beat and raise, and progress toward FY25 ACV and Rule of 40 goals that could support the current P/E multiple.

Analyst Commentary

Recent commentary points to a more constructive stance on nCino, with analysts adjusting their views based on near term execution, medium to long term growth drivers, and how these could support the current valuation.

Bullish Takeaways

Bullish analysts describe what they view as an achievable near term setup, which they think could support confidence in the company meeting its upcoming targets.
There is explicit discussion of a potential Q3 beat and raise. If this occurs, some analysts believe it could help justify the current P/E and potentially support a higher trading range over time.
Medium to long term catalysts for growth are highlighted as a key reason for optimism, with progress toward FY25 ACV and Rule of 40 goals viewed as important markers of execution quality.
Valuation is described as reasonable relative to these growth and execution targets, which bullish analysts see as a support for the current equity narrative.

Bearish Takeaways

The potential Q3 beat and raise is framed as an expectation rather than a certainty, so there is a risk that results or guidance could fall short of what bullish analysts are anticipating.
Execution toward FY25 ACV and Rule of 40 targets is central to the positive thesis, which means any slip in customer activity, deal timing, or cost control could affect both growth and the multiple.
With the valuation linked to achieving these growth and profitability milestones, bearish analysts may see limited room for error if the company experiences slower progress than currently anticipated.
The emphasis on medium to long term catalysts suggests that some of the upside case depends on factors that may take time to materialize, which could leave the stock exposed if near term momentum slows.

What's in the News

The Board of Directors authorized a share buyback plan on December 8, 2025, which signals approval for the company to repurchase its own stock over time (Key Developments).
nCino announced a stock repurchase program of up to US$100 million, funded by existing cash and cash equivalents, credit facility capacity, and future cash flows (Key Developments).
From August 1, 2025 to October 31, 2025, nCino repurchased 1,423,701 shares for US$39.45 million, bringing the total to 3,996,483 shares repurchased for US$100 million under the April 1, 2025 buyback program (Key Developments).
nCino provided earnings guidance for the fourth quarter ending January 31, 2026, with expected total revenue between US$146.75 million and US$148.25 million and subscription revenue between US$130.75 million and US$132.25 million (Key Developments).
For the fiscal year ending January 31, 2026, nCino expects total revenue between US$591.9 million and US$593.4 million and subscription revenue between US$520.5 million and US$522.0 million (Key Developments).

Valuation Changes

Fair Value: trimmed slightly from US$34.79 to US$34.14 per share, reflecting a modest adjustment to the underlying valuation model.
Discount Rate: nudged up from 8.70% to 8.70%, a very small change that has a limited effect on the present value of future cash flows.
Revenue Growth: adjusted marginally from 8.10% to 8.09%, keeping the growth outlook effectively in the same range as before.
Net Profit Margin: eased slightly from 12.32% to 12.31%, indicating a minimal change in long term profitability assumptions.
Future P/E: reduced modestly from 53.34x to 52.42x, suggesting a small recalibration of how much investors might be willing to pay for future earnings.

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.What are the underlying business or industry changes driving this perspective?

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 8.3% annually over the next 3 years.
Analysts assume that profit margins will increase from -5.9% today to 7.7% in 3 years time.
Analysts expect earnings to reach $56.0 million (and earnings per share of $0.35) by about September 2028, up from $-33.6 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 94.3x on those 2028 earnings, up from -105.7x today. This future PE is greater than the current PE for the US Software industry at 36.6x.
Analysts expect the number of shares outstanding to grow by 0.22% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.62%, 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 $35.536 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 $41.0, and the most bearish reporting a price target of just $29.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $728.9 million, earnings will come to $56.0 million, and it would be trading on a PE ratio of 94.3x, assuming you use a discount rate of 8.6%.
Given the current share price of $30.62, the analyst price target of $35.54 is 13.8% 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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