nCino’s 2026 Q4 Earnings Call: Rule of 40 Timeline Wavers and AI Adoption Claims Clash

Date of Call: Mar 31, 2026

Financials Results

• Revenue: Q4: $149.7M, up 6% YOY; FY2026: $594.8M, up 10% YOY
• EPS: Q4: $0.37 per diluted share (non-GAAP), up from $0.19 YOY; FY2026: $1.07 per diluted share (non-GAAP), up from $0.72 YOY
• Operating Margin: Q4: 23% of total revenues, up from 17% YOY; FY2026: 22% of total revenues, up from 18% YOY

Guidance:

• Q1 FY2027 total revenue: $154.5M-$156.5M; subscription revenue: $137M-$139M, up 8%-10% YOY at midpoint.
• Q1 FY2027 non-GAAP operating income: $38M-$40M.
• FY2027 free cash flow: $132M-$137M, up 63% YOY at midpoint.
• FY2027 total revenue: $639M-$643M, up 8% YOY at midpoint; subscription revenue: $569M-$573M, up 9% YOY at midpoint (excluding U.S. mortgage: 10%-11% growth).
• FY2027 non-GAAP operating income: $165M-$170M.
• FY2027 ACV net additions: $60M-$65M (organic constant currency), ending ACV: $662.5M-$667.5M, up 10% YOY at midpoint.

Business Commentary:

Revenue and ACV Growth:

• nCino reported total revenues of $149.7 million for Q4, a 6% year-over-year increase, and $594.8 million for fiscal year 2026, up 10% from fiscal year 2025.
• The company's ACV grew by 17% year-over-year, reaching $602.4 million.
• The growth was driven by strong customer adoption of AI capabilities, product innovation, and increased demand for nCino's AI-powered platform.

AI Strategy and Adoption:

• Over 170 customers have purchased AI intelligence units, and Banking Advisor usage increased by 25 times from October to March.
• The momentum in AI adoption is attributed to nCino's strategy of embedding AI throughout its platform, providing practical wins for financial institutions, and driving customer retention and expansion.

International and Segment Performance:

• International subscription revenues were $28.4 million in Q4, up 1% year-over-year, and $109.5 million for fiscal year 2026, up 19% year-over-year.
• Growth in international markets was supported by new leadership, a new go-to-market strategy, and significant wins in EMEA and Japan.

Pricing Model Transition:

• Approximately 38% of nCino's ACV has transitioned from seat-based pricing to platform pricing.
• The shift is driven by the company's vision to move towards an outcomes-based pricing model, which aligns with customer demand for AI capabilities and has been well-received, leading to early renewals and strong customer retention.

Leadership and Sales Force Expansion:

• nCino appointed Keith Kittell as Chief Revenue Officer to further accelerate subscription revenue growth.
• The hiring reflects the company's focus on scaling revenue operations and leveraging Keith's experience in financial services and enterprise sales to drive growth.

Sentiment Analysis:

Overall Tone: Positive

• "We exceeded our financial guidance across every key metric and delivered an exceptional ACV result, up 17% year-over-year... The team executed incredibly well." "Our sales pipeline looks great, and we believe our AI agents make nCino even more valuable and sticky to our customers." "We feel really good about our headcount and expense plan and our ability to continue generating increasing non-GAAP operating income and free cash flow." "It is an incredibly exciting time to be part of nCino, the company leading the financial services industry into the world of AI-powered banking."

Q&A:

• Question from Alex Sklar (Raymond James): On the positive sales pipeline commentary and the ACV outlook, can you just frame what you saw in terms of the change in close rates or win rates on the back half of the year versus prior years? I know you referenced coming in above. Then how you approach the ACV outlook from a pipeline coverage perspective versus last year. Thank you.
  Response: Pipeline increased due to renewed focus on execution and demand generation; conversion rates were healthy, leading to larger ACV outcomes.

• Question from Alex Sklar (Raymond James): Sean, you gave a lot of great color on the banking advisor adoption. 170 customers now on the platform. I think you have over 100 skills now versus 2 a year ago. Can you just frame where you’re actually seeing the greatest usage across that portfolio of capabilities and skills? Then in terms of the magnitude of a 25 times growth in credit usage versus October, maybe help frame how many of those customers are approaching kind of the upper end of their purchase credit allotment.
  Response: Focus is on adoption and customer comfort; selling large blocks of intelligence units upfront. Greatest traction seen with agentic credit reviews, Locate & File, credit monitoring, and Automated Spreading.

• Question from Joe Vruwink (Baird): Just to stay on some of the AI debates, you know, lending is a very complicated process, and part of that complexity, I’m sure we can appreciate ties to all the different systems and data and decisions that go into it. I guess the risk is that AI models can be good at orchestration. Are you seeing that type of capability and it starts to eat into nCino’s differentiation, or does it cause you to think about how the platform is currently architected, and maybe doing some things differently to match up against what AI makes possible?
  Response: AI makes coding easier, but deploying compliantly in banking is still hard; nCino's platform, built for compliance from day one, is uniquely positioned to capitalize on AI in banking.

• Question from Joe Vruwink (Baird): On the intelligence units, do you have any metrics you can share maybe around efficiency gains or P&L impact that customers using the units have seen so far? Or maybe is there a spectrum of outcomes you’re seeing between heavy and light users? Can you kind of present to your customer base that here are examples where greater consumption is actually translating into greater benefits, and you start to build referenceability in kind of that way?
  Response: Seeing good gains around credit monitoring, with time reductions from months to days; will highlight direct customer outcomes at nSight. There's a direct correlation between outcomes and intelligence unit consumption.

• Question from Michael Infante (Morgan Stanley): On pricing, obviously sounded like a really strong result with 38% of revenue now on the new pricing model. Any incremental commentary you can share just in terms of price realization for the fiscal 4Q renewal cohort versus your plan? In the instances where customers did push back, can you sort of speak to some of the instances or initiatives you have in place to retain those customers, either in terms of, you know, ancillary product attach or things like Banking Advisor and/or lower price realization?
  Response: Pricing transition has been exceeding internal plans; momentum picked up in Q4. Focus is on educating customers on the value and outcomes, leading to early renewals and exceeding targets.

• Question from Michael Infante (Morgan Stanley): Then maybe just a quick follow-up on gross margins. I know it’s fairly early in terms of thinking about Banking Advisor monetization, but do you expect the consumption of those incremental credits to be gross margin accretive? Should we be focusing on incremental gross profit dollars? How are you sort of thinking about, you know, the inference costs and customer usage intensity when usage exceeds expectations?
  Response: Expect AI to contribute to gross margins by helping customers reallocate labor to high-value activities; usage increase has been significant (25x from Oct to Mar) and margins are holding up.

• Question from Christopher Kennedy (William Blair): Can you provide an update on the credit union initiative?
  Response: Credit union team is activated and growing pipeline; planning to sell entire platform to credit union base, with good momentum.

• Question from Christopher Kennedy (William Blair): Just as a follow-up, historically, you’ve given ACV by category. Can we get an update between mortgage, commercial, and consumer? Thanks.
  Response: No ACV breakdown provided for this call.

• Question from Ryan Tomasello (KBW): Starting with the organic subs guide, you’re talking about 10%-11% growth ex mortgage for the year. Appreciate the commentary on international being accretive this year, but was hoping you can just put a finer point on the drivers there, ex-mortgage, particularly with respect to the U.S. business ex mortgage in terms of subs growth outlook.
  Response: Sales momentum is strong across product and geography; AI is a key driver; churn is returning to historic lows, supporting growth.

• Question from Ryan Tomasello (KBW): Just following up just kind of on this subs cadence for the year. The 1Q guide round numbers looks like 9%-11% organic subs growth versus 9%-10% for the full year. Just trying to reconcile that with your comments earlier, Greg, about being, you know, confident in being able to continue to drive this acceleration in subs growth and just, you know, how we should think about this cadence throughout the year with respect to that Rule of 40 target.
  Response: Mortgage comps in Q2 and Q3 are tougher, affecting trajectory; should be considered in modeling.

• Question from Aaron Kimson (Citizens JMP): Sean, can you talk about why now is the right time to bring Keith in to run sales, and what his top two priorities will be in fiscal 2027? It seems like the sales team is executing well.
  Response: Sales team is executing well; Keith Kittell appointed to scale globally and take revenue growth to next level, especially with North America leadership transition.

• Question from Aaron Kimson (Citizens JMP): As a follow-up, it was good to see the mortgage win with a top 40 bank where they also use your commercial lending, small business lending and treasury products. Are you getting to a point in mortgage sales cycles now where you have a better idea of how the move-up market with nCino mortgage is going, now that you’re three-quarters in there from when you really rolled it out after the investor day last year at nSight? At the larger FIs, are you finding that existing relationships in other parts of the bank are helping you get a foot in the door on the mortgage side of the house, or that the buyers are just generally separate in those big organizations?
  Response: Learning from experiences; top 30 U.S. bank on platform is generating peer interest. Existing relationships in other lines of business are helping to open doors to mortgage buyers.

• Question from Saket Kalia (Barclays): I think we said we’ve got about 38% of ACV on platform pricing now, which is great to hear. I’m curious, have any of your top 20 banks made that transition yet? Were there any learnings from those customers in particular that you feel you could build upon?
  Response: Yes, some larger customers have transitioned; rollout has exceeded expectations, with largest ACV customer on a 5-year deal under new model.

• Question from Saket Kalia (Barclays): Maybe for my follow-up. It was great to hear you reconfirm the Rule of 40 expectation. Is it maybe fair to say that that Rule of 40 is achievable based on the ACV that you’ve already booked here in fiscal 2026? Or is it dependent on some of the new bookings that you anticipate this year as well?
  Response: Rule of 40 includes some new bookings; pipeline and AI excitement support plan, with detailed contribution walk provided in presentation.

• Question from Charles Nabhan (Stephens): Looking back over the past couple years, you’ve done several acquisitions. I was wondering if you could provide us an update on the progress you’ve made on Sandbox and DocFox, any positives or negatives and, you know, just an update on the traction you’re getting on those solutions in the market.
  Response: Sandbox is strategic foundation for integration gateway and agent data access. DocFox pipeline is growing; technology integration complete, now focusing on converting pipeline in H1.

• Question from Adam Hotchkiss (Goldman Sachs): Sean, where are bank CIOs leaning in most to AI from your perspective, whether that’s nCino or otherwise, and how does that differ across financial institution size? I’m just curious if smaller to mid-size banks are maybe more likely to lean in to packaged AI use cases. Are you seeing any appetite for some of the larger banks in particular to try to do anything in-house? I’m just trying to understand ultimately what banks are out there trying versus not trying from an experimentation perspective, and then how nCino fits into that.
  Response: Downmarket banks prefer prepackaged solutions; upmarket banks are more experimental, sometimes building their own agents, but still need context, trust, and compliance. nCino's platform serves both.

• Question from Terry Tillman (Truist Securities): On the early renewals, it seems like that’s a good sign of the interest in the new innovation. Could you all quantify how much early renewals impacted or benefited the strong Q4 ACV or the in-year ACV target? The kind of the second part of this is with the early renewals, I think you did say that one did a contractual renewal at 5 years, but what is the duration looking like on early renewals versus the original contract? Then just do they tend to consume or sign up for more Banking Advisor or skills versus the non-early renewals?
  Response: Early renewals contributed to strong ACV trend (net retention rate up to 112%); durations vary but include longer-term deals (e.g., 5-year). AI discussions provide opportunities to explore additional value, driving momentum.

• Question from George McGrehan / Koji Ikeda (Bank of America): I know that you guys already talked about the relationship between sub revs and ACV, but I kinda wanted to ask this simplistic question. Apologies if it’s a bit redundant, but if you could humor me. Fiscal year 2026 sub-revenue came in higher than ending fiscal year 2025 ACV, but the initial guidance for fiscal year 2027 sub-revenue doesn’t quite get us to ending fiscal year 2026 ACV. What’s kind of the relationship there, and how would you kind of describe the level of conservatism in this fiscal year 2027 sub-revenue guide?
  Response: Reconciling ACV and sub rev guide involves: portion of FY2026 ACV contributed to sub revs, revenue recognition straight-line for contract price increases, churn from older seat-based model, and mortgage overages not in ACV.

• Question from Ella Smith (JP Morgan): I know many products can be implemented in a matter of weeks or months, but when you land a large new customer, as you did in Japan this quarter, how long does it take to implement a large customer like that? And when do you begin recognizing revenue?
  Response: Implementation times are compressing; large Japanese deal has upfront prep work, but hands-on deployment expected to take months. Revenue recognition under platform pricing is straight-lined over contract term, starting a month or two after signing.

• Question from Nick Altmann (BTIG): Just on the renewal base. I know you guys mentioned 38% of the ACV base is renewed to the new pricing, but can you just talk about where you expect that mix to trend as it relates to the 2027 ACV guide and whether that contemplates some continuation in the early renewal activity that you guys have been seeing?
  Response: Expect similar renewal cohort performance in FY2027 as FY2026; accelerated renewals ahead of plan. No one-time step-up expected, making compares easier.

• Question from Ken Suchoski (Autonomous Research): I wanted to dig into the long-term moat of the business a little bit because it seems like investors are questioning the terminal value of these software companies more broadly. You mentioned how banking is a highly regulated business and how that’s different. Can you just talk a little bit about how nCino works with regulators and how that might impact the ability to remain entrenched and prevent new companies from coming into the space. Secondly, it sounds like data is going to be one of the key sort of aspects to the moat longer term. Are we at the point where the network effects of the data are strong enough to keep nCino in the lead, or is there, you know, this sense of urgency across the business to try to build up that aspect of the moat?
  Response: Regulatory expertise embedded in product management is key; unique 14-year data moat accumulated over time is unparalleled. nCino is not reacting but leveraging 14 years of data to power AI, creating durable competitive advantage.

Contradiction Point 1

Trajectory and Certainty of Achieving Rule of 40 Target

Statements shift from a clear, confident timeline to a more cautious, conditional outlook.

Michael Infante (Morgan Stanley) - Michael Infante (Morgan Stanley)

2026Q4: We are confident in achieving our Rule of 40 target around Q4 fiscal '27. - [Gregory D. Orenstein](CFO)

Can you explain how the high incremental AOI margins in Q3 and full-year outlook are driving leverage, and whether AI efficiencies boost confidence in achieving medium-term margin targets faster? - Michael Infante (Morgan Stanley)

20251204-2026 Q3: The company... feels incrementally better about its position than last quarter and remains confident in achieving its Rule of 40 target around Q4 fiscal '27. - [Gregory D. Orenstein](CFO)

Contradiction Point 2

Characterization of AI Adoption Pace

Descriptions of AI deployment speed shift from a rapid, active transition to a focus on early-stage, foundational discussions.

Joseph Vruwink (Baird) - Joseph Vruwink (Baird)

2026Q4: We are seeing a shift in adoption speed, moving from early discussions about AI to rapid deployment. - [Sean Desmond](CEO)

Can you explain the $1.4 million execution-based upside in Q3 and why it didn't fully flow through to Q4 guidance, and whether the AI experience is being scaled down to smaller customers and if early renewals could become more important for ROI? - Charles Nabhan (Stephens)

20251204-2026 Q3: The market is still in the early days of AI adoption, with a shift from 'what is AI?' to 'how can I deploy it quickly?' - [Sean Desmond](CEO)

Contradiction Point 3

Banking Advisor Revenue Contribution Timeline

Conflicting statements on when AI product revenue will be included in financial plans.

Ryan John Tomasello (Keefe, Bruyette, & Woods) - Ryan John Tomasello (Keefe, Bruyette, & Woods)

2026Q4: The full-year revenue contribution is not yet part of the financial plan. We are actively gathering more data points and expect it to be included in FY27. - [Gregory D. Orenstein](CFO)

What is the ACV uplift from Banking Advisor usage over several quarters? - Ryan John Tomasello (Keefe, Bruyette, & Woods)

2026Q2: We are beginning to see measurable revenue contributions from Banking Advisor in our current financials, which are being integrated into our growth projections. - [Sean Desmond](CEO)

Contradiction Point 4

Growth Drivers for Mortgage Business

Inconsistent attribution for mortgage growth, shifting from market share gains to industry recovery.

Did Terrell Frederick Tillman (Truist Securities) participate in the earnings call? - Terrell Frederick Tillman (Truist Securities)

2026Q4: Our mortgage growth is primarily driven by a recovery in the broader industry and a return to pre-pandemic volume trends. - [Gregory D. Orenstein](CFO)

What uplift are you seeing in platform pricing, how is it tracking vs. expectations, and how might larger renewals impact next year, and what factors drove the raised mortgage guidance to 5% growth? - Terrell Frederick Tillman (Truist Securities)

2026Q2: The improved guidance is due to strong deal activity and pipeline momentum, not a reliance on industry recovery. The mortgage team gained market share during the difficult cycle... - [Sean Desmond](CEO)

Contradiction Point 5

AI's Impact on Implementation Timelines and Margins

Contradiction on whether AI is a solution to or a contributor to implementation complexity.

What were Adam Hotchkiss's comments from Goldman Sachs during the earnings call? - Adam Hotchkiss (Goldman Sachs)

2026Q4: nCino has evolved by delivering more built-in functionality with less optionality, which has led to longer implementation times than desired. The new focus is on providing robust, scalable solutions that minimize long projects, positioning for faster delivery and improved efficiency. - [Sean Desmond](CEO)

What are the key deployment and friction points in implementation affecting pipeline conversion, and what gives you confidence in improvement by H2? - Koji Ikeda (Bank of America)

2026Q1: AI and modernized software development will increase build velocity with leaner teams, enabling more efficient operations. - [Sean Desmond](CEO)