nCino Q4 results show 'stabilizing' demand, but risk-reward 'balanced,' Baird says

Shares of cloud banking software company nCino (NASDAQ:NCNO) jumped more than 17% on Wednesday after its fourth-quarter results indicated demand is "stabilizing," including in the U.S. enterprise market, Baird said.

"... nCino continues to see incremental traction outside commercial lending (accounting for [more than] 50% of 4Q bookings) and strong EBITDA/ FCF execution," analyst Joe Vruwink wrote in an investor note. "Net, we view this as a good update and believe the stock likely enjoys a near-term rebound."

However, the risk-reward is "relatively balanced," Vruwink said, with shares trading at seven times revenue and 10 times gross profit.

Vruwink has a Neutral rating on nCino and raised his price target to $36 from $34 following the results.

For the period ending Jan. 31, 2024, the Wilmington, N.C.-based company earned an adjusted $0.21 per share as revenue rose 13.% year-over-year to $123.7M. Analysts had been expecting the company to earn $0.12 per share excluding one-time items on $124.7M in revenue.

The company also offered up guidance for the first-quarter and fiscal 2025. It expects first-quarter sales to be between $126M and $127M, with subscription revenue accounting for $108.75M to $109.75M of the total. It expects to earn between $0.13 and $0.14 per share on an adjusted basis.

Analysts were expecting adjusted earnings of $0.12 per share on $128.83M in revenue.

For the full-year, revenue is expected to fall within a range of $538.5M to $544.5M, with subscription revenue between $463M and $469M. Adjusted earnings per share are expected to be between $0.60 and $0.64.

Analysts were expecting adjusted earnings of $0.57 per share on $545.43M in revenue.