nCino's Q2 2026: Contradictions Emerge on Mortgage Volume, AI Strategy, and ACV Growth

The above is the analysis of the conflicting points in this earnings call

Date of Call: None provided

Financials Results

• Revenue: $148.8M, up 12% YOY
• Operating Margin: 20% non-GAAP operating margin (=$30.0M), reflecting revenue overperformance and efficiency

Guidance:

- Q3 FY26: total revenue $146–$148M; subscription revenue $127.5–$129.5M; non-GAAP operating income $31.5–$33.5M; non-GAAP EPS $0.20–$0.21 (117M diluted shares).- FY26: subscription revenue $513.5–$517.5M (~10% YOY; 9% cc); total revenue $585–$589M (~9% YOY; 8% cc).- FY26 non-GAAP operating income $117.5–$121.5M; EPS $0.77–$0.80 (118M shares); interest expense ≈$15M.- FY26 ACV $564–$567M (10% growth); net additions $48–$51M incl. $4.5M from SandBox.- FX adds ~$2.1M to FY subscription revenue (~$1.6M realized in Q2; ~$0.5M expected in Q4).- FY26 U.S. Mortgage subscription revenue growth ≈5% (Q3 down YOY and sequentially; Q4 lowest YOY growth); inorganic subscription revenue $17.5M unchanged.

Business Commentary:

Revenue and Profitability Surge:* - nCino reported total revenues of $148,800,000 for the second quarter of fiscal 2026, up 12% year-over-year. - The company outperformed guidance ranges for both revenues and profitability metrics. - This growth was driven by strong activity in the North American enterprise market, increased adoption of their AI capabilities, and a supportive macroeconomic environment.

• Subscription Revenue Growth:
• Subscription revenues were $130,800,000, up 15% year-over-year on a reported basis and 10% organically.
• The growth was particularly strong in the U.S. Mortgage business, with subscription revenues up 22% year-over-year.

• This increase can be attributed to a volume growth concentrated in large I and B customers, and the platform pricing shift in mortgage.

• Credit Union and European Market Expansion:

• nCino achieved six new credit union logos and 35 cross-sells in the second quarter, demonstrating significant traction in this market.
• The company signed its first customer in Spain, opening a market with over $4,000,000,000 in opportunity.

• These initiatives were part of nCino's strategic focus on expanding its presence in EMEA and activating the credit union market, supported by successful customer wins and strategic partnerships.

• AI and Product Innovation:

• Over 80 customers purchased nCino's Banking Advisor AI technology, representing the first pillar of nCino's AI strategy.
• The integration of AI capabilities is expected to enhance customer experience and drive efficiency across financial operations.
• This development is seen as transformative for the financial services industry, with nCino positioning itself as the leader in AI banking due to its expertise in financial verticals and data foundation.

  Sentiment Analysis:

  • Management: “we outperformed our guidance ranges for both our revenues and profitability.” CFO: “total revenues were $148.8M, up 12% YOY,” and non-GAAP operating income was 20% of revenue. FY26 outlook raised: subscription revenue to $513.5–$517.5M and non-GAAP operating income to $117.5–$121.5M. Pipeline described as the strongest in quite some time, with macro headwinds subsiding and AI/Banking Advisor traction (~80 customers) aiding wins.

  Q&A:

  • Question from Brent Bracelin (Piper Sandler): What drove the organic growth strength this quarter and is it sustainable or one-time?
  • Response: Stronger macro and strong execution lifted activity to levels not seen in years; momentum appears sustainable.
  • Question from Brent Bracelin (Piper Sandler): What’s resonating with Banking Advisor and how critical are upcoming agentic workflows?
  • Response: AI is influencing wins; ~80 customers bought Banking Advisor; agentic workflows start rolling out this year with careful, compliant adoption.
  • Question from Terry Tillman (Truist): How are platform pricing uplifts tracking, including with large banks, and into next year?
  • Response: Transition is on plan with ~10% apples-to-apples uplift target; biggest renewal cohort is Q4; AI aids adoption.
  • Question from Terry Tillman (Truist): Is mortgage growth from share gains rather than industry recovery?
  • Response: Yes—momentum reflects execution and competitive strength with IMBs and depositories, not reliance on rates.
  • Question from Ryan Tomasello (KBW): What drove six new credit union logos and is the CU sales team fully ramped?
  • Response: Dedicated CU focus is working; cross-sell across core products is driving momentum with more runway ahead.
  • Question from Ryan Tomasello (KBW): Any way to size Banking Advisor usage uplift to ACV/revenue?
  • Response: No FY26 revenue assumed; focus is adoption now with monetization expected to factor into next year’s plan.
  • Question from Michael Infante (Morgan Stanley): How has visibility into meeting/exceeding the ACV outlook improved?
  • Response: First-half net bookings were solid and pipeline is robust; confidence is high, with execution the key.
  • Question from Michael Infante (Morgan Stanley): Will Banking Advisor contribute revenue this fiscal year?
  • Response: No; current-year plan assumes no overage revenue as adoption is prioritized.
  • Question from Adam Hotchkiss (Goldman Sachs): Performance highlights for DocFox and Full Circle and onboarding pipeline into H2/2026?
  • Response: Full Circle is on plan, enabling EMEA CLM; DocFox integration largely complete, building H2 pipeline for next-year revenue impact.
  • Question from Adam Hotchkiss (Goldman Sachs): Any change in Rule of 40 mix between growth and margin?
  • Response: Bias remains toward growth with improving macro and AI leadership; commitment to Rule of 40 by Q4 FY27 unchanged.
  • Question from Aaron Kimson (Citizens): Are Banking Advisor and updated mortgage compelling enough to drive early renewals and pricing tailwinds?
  • Response: Yes; AI interest is pulling renewals forward and accelerating adoption of the new pricing model.
  • Question from Aaron Kimson (Citizens): Any risk from stablecoins to community banks in your base?
  • Response: Customers aren’t prioritizing stablecoin solutions now; nCino is monitoring but focused on current core needs.
  • Question from Chris Kennedy (William Blair): How should we think about growth in FY27?
  • Response: Too early to guide; focus is on executing FY26; pipeline and global activity are strong.
  • Question from Chris Kennedy (William Blair): What’s driving the stronger pipeline?
  • Response: Supportive macro, AI-driven outcomes pulling demand forward, and tighter pipeline discipline across regions and products.
  • Question from Alex Sklar (Raymond James): Are you seeing international reacceleration under new leadership?
  • Response: Yes; strong pipeline, especially in Continental Europe, with Full Circle integration bolstering CLM opportunities.
  • Question from Alex Sklar (Raymond James): How are H2 mortgage assumptions set after Q2 upside?
  • Response: Assumes seasonality and avoids extrapolating Q2; sticking to guidance while acknowledging share gains.
  • Question from Koji Ikeda (Bank of America): Bigger growth driver ahead—macro tailwinds or vertical AI strategy?
  • Response: Growth will come from delivering outcomes via the platform and AI; execution over macro factors.
  • Question from Koji Ikeda (Bank of America): Pace of professional services gross margin improvement?
  • Response: Gradual; as existing projects wind down and efficiency initiatives ramp, with benefits expected next year.
  • Question from Joe Roone (Baird): How is the new pricing model landing with large commercial customers; does it broaden nCino usage?
  • Response: Outcome-based model resonates and simplifies scaling vs seats; early conversations positive though change requires education.
  • Question from Joe Roone (Baird): How did H1 bookings compare to plan and how is H2 shaping?
  • Response: H1 net bookings were strong; H2 pipeline supports meeting/exceeding the ACV guide—focus now is closing.
  • Question from Charles Nabin (Stephens): How to think about growth of Full Circle and SandBox as they become organic?
  • Response: Both are on plan; deeper integration should make them more accretive next year.
  • Question from Charles Nabin (Stephens): Mortgage mix on platform pricing and IMB vs depository exposure?
  • Response: About one-third of converted platform-pricing ACV is mortgage; revenue skewed to IMBs/homebuilders, logos more balanced.