nCino Holds the Bank Loan File but Bought Back Nearly Four Times the Cash Shareholders Kept

Cash left for shareholders after capex and all stock pay

$60.8M

Twelve months ended Jul 31, 2026, our calculation

Stock bought back

$240.2M

Twelve months ended Jul 31, 2026, our calculation

Drop in shares outstanding

8.7%

Aug 2025 to Aug 2026 cover pages, our calculation

1. Our call: Hold off, because nCino owns the bank's loan file but is borrowing to buy back stock faster than it makes cash

Our call: Hold off. nCino sells software that banks, credit unions and mortgage lenders use to open accounts, underwrite loans and manage them to payoff, and it says it has more than 2,700 customers worldwide ^[2].

Fundamental parts of that software run on the Salesforce Platform, under an agreement that runs to Jan 31, 2031 ^[1].

Second quarter fiscal 2027 revenue, for the three months ended Jul 31, 2026, rose 8.2% to $161.0M, and subscription revenue rose 10% to $143.5M ^[2]. GAAP operating income was $13.6M against a loss of $9.3M a year earlier ^[2].

The company guides fiscal 2027 revenue to $644.0M to $647.0M ^[2].

We measure owner cash, the cash left for shareholders: operating cash flow, less capital spending, less all stock pay. nCino discloses no capitalized software line in its cash flow statement, so capital spending here is purchases of property and equipment ^[3].

On that measure shareholders kept $60.8M over the twelve months ended Jul 31, 2026, our calculation from the 10-K, 10-Q and SEC XBRL ^[1]

2. Research spending is about a fifth of revenue and falling

2b. nCino owns the loan file, but Salesforce owns the ground it sits on

A commercial loan at an nCino bank starts, is underwritten, is approved and is monitored inside nCino's software, which makes it the bank's working record for that loan ^[1]. Remaining performance obligations, contracted revenue not yet recognized, were $1.4B at Jul 31, 2026, up from $1.2B a year earlier ^[3][9].

One pass and three partials. The gate is the loan file: once a bank's credit officers, policies and approvals live in nCino, ripping it out means rebuilding how the bank lends ^[1].

The weakness is the Salesforce layer. Salesforce hosts the applications and can end the agreement on a change in control in favor of a direct competitor, among other triggers ^[1].

3. Growth has slowed every year since the mortgage deal

Fiscal 2023's jump came mostly from buying SimpleNexus, the mortgage software maker; goodwill rose by $785.2M in fiscal 2022 when that deal closed ^[9]. Since then each year has grown more slowly, and the second quarter's 8.2% is the slowest in the table ^[2][9].

The company's fiscal 2027 guide of $644.0M to $647.0M implies growth of about 8.3% to 8.8%, our calculation ^[2][9]. The company also guides annual contract value to $662.5M to $667.5M at fiscal year end, a company measure of contracted yearly subscription value ^[2].

Subscription revenue is growing faster than total revenue because professional services fell to $17.5M in the quarter from $18.0M, our calculation ^[2][3].

4. The U.S. carries the business while the UK shrinks

U.S. revenue was $247.6M in the first half, 77.3% of the total, up 8.7% ^[3]. The United Kingdom fell to $35.5M from $36.9M, while other countries rose to $37.3M from $28.2M ^[3].

Revenue by geography is based on the contracting entity, not where the customer sits ^[3].

The second quarter release names new or expanded customers in Germany, Japan, Iowa and Indiana, including a Japanese regional bank consolidating consumer lending on nCino ^[2]. Those are wins, but the filings we reviewed do not size them ^[2][3].

Banks buy slowly and are heavily regulated, and the 10-K lists customer regulation, data security rules and fluctuating interest rates among its main risks ^[1]. Mortgage software is the part of the business we would expect to be most exposed to lending volumes, our reading; the filings we reviewed do not break out its revenue ^[1][3].

5. Margins finally turned positive on GAAP

GAAP operating margin was 8.5% in the second quarter, our calculation, against minus 6.2% a year earlier ^[2][3]. The improvement came from costs: operating expenses fell to $87.2M from $97.4M, with general and administrative down 24.8% and research down 10.5%, our calculation ^[3].

Subscription gross margin was 72.2% in the quarter, our calculation, after $39.9M of subscription costs that consist mainly of fees paid to Salesforce for platform access and hosting ^[3]. When nCino resells Salesforce's own customer relationship software alongside its platform, it charges more and pays Salesforce more ^[3].

A year earlier subscription gross margin was 71.0%, so the Salesforce cost has not yet squeezed margins, our calculation ^[3].

nCino guides fiscal 2027 non-GAAP operating income to $171.0M to $174.0M and free cash flow to $137.0M to $142.0M ^[2]. Both are company measures, and the free cash flow figure does not subtract stock pay.

We do not use them.

6. Cash left for shareholders has only just turned positive

Across fiscal 2023 to 2026, what shareholders kept added up to minus $97.6M, our calculation from SEC XBRL ^[9]. The business has spent most of its public life paying staff in stock worth more than the cash it generated ^[9].

The first half of fiscal 2027 was strong, but part of it was timing: falling receivables added $42.9M to operating cash and deferred revenue added $12.0M ^[3]. In fiscal 2026 the first half produced $72.1M of the year's $90.1M of operating cash, so the first half has tended to run ahead of the second, our calculation ^[3][9].

The year-earlier first half also got $51.8M from falling receivables, so the twelve-month figure is not unusually flattered by that timing, our reading ^[3].

If fiscal 2027 free cash flow lands at the midpoint of the $137.0M to $142.0M guide and stock pay runs near the first half's pace, free cash for investors would be roughly $70M to $75M for the year, our estimate

7. Buybacks are running far ahead of the cash, funded with debt

nCino repurchased $175.7M of stock in the first half of fiscal 2027 and $125.1M in fiscal 2026 ^[3][9]. The company says it has executed $300M of repurchases since April 2025, including a $100M accelerated program finished in the second quarter, and on Aug 25, 2026 its board authorized another $100M ^[2][8].

Cover page share counts fell from 115.8M in August 2025 to 105.7M in August 2026, down 8.7%, our calculation ^[9]. That is a fast shrink for a company whose stock pay was $71.4M over the same twelve months ^[3][9].

The money did not come from operations alone. On Mar 30, 2026 nCino added a $200.0M senior secured term loan to its credit agreement, maturing Oct 28, 2029, priced at SOFR plus 2.00% with step-ups tied to leverage ^[3].

Debt was $275.4M at Jul 31, 2026 against $83.3M of cash, and debt was about 4.5 to 1 against twelve-month cash left for shareholders, our calculation ^[3][9]

8. The main risks are Salesforce, slower growth, mortgages and debt

Salesforce is the largest single dependency. nCino's agreement runs to Jan 31, 2031 and renews yearly after that unless either side gives notice, and Salesforce's fees are the main cost of subscription revenue ^[1][3].

A price increase or a change in the relationship would hit margins directly ^[1].

Growth has slowed from 16.7% in fiscal 2024 to 8.2% in the latest quarter ^[2][9]. The 10-K names point solution vendors, systems banks build themselves and newer automation startups as its main competition ^[1].

Lending volumes, which nCino does not control, would weigh on mortgage software if they fall, our reading ^[1]. And goodwill of $1.08B sits on the balance sheet from the SimpleNexus, DocFox, FullCircl and Sandbox Banking deals, against shareholders who have so far seen little cash ^[1][3][9].

9. A first year of real cash, not yet enough to carry the buybacks

Fiscal 2027 looks like the first year nCino will produce meaningful cash for shareholders after stock pay, our reading of the guide ^[2]. GAAP net income was $18.7M in the first half, after $5.2M for all of fiscal 2026 ^[3][9].

Our base case is revenue growth of 7% to 9% a year and cash left for shareholders of $70M to $110M a year over the next two years, our estimate ^[2][3][9]. On that path, buybacks at the recent pace would require more borrowing, and we would rather see the company match repurchases to what shareholders kept.

10. Agents that underwrite loans still need the loan file

A software agent that gathers a borrower's documents, spreads financial statements or checks a loan against policy still has to read and write the bank's loan record, and at nCino banks that record lives in nCino ^[1]. The company now calls itself the platform for agentic banking and says customers are expanding commitments to its automation tools ^[2].

The gate would widen if banks price agent work through nCino, because every automated step would run on its file and its rules ^[1][2]. It would narrow if Salesforce, whose platform sits underneath, sells its own agents to the same banks, or if banks call agents directly against their core systems ^[1].

Asset-based pricing helps here: nCino is paid on the size of the bank's portfolio, not per user, so fewer human seats need not mean less revenue ^[1]. But it also means nCino is not yet paid per outcome, such as loans closed ^[1].

The Sandbox Banking deal, now the nCino Integration Gateway, is the piece that could make nCino the connection between bank systems and outside tools ^[1]. The filings give no usage figures for it

11. A new chief executive, a founder as chair and an investor in the boardroom

Sean Desmond became chief executive on Feb 1, 2025, after serving as chief product officer from May 2024 and chief customer success officer from July 2013, and the proxy lists him as chief executive and president ^[4][5]. Pierre Naudé, chief executive until then, became executive chairman, and from Feb 1, 2026 he has served as non-employee chairman ^[4][5].

Greg Orenstein has been chief financial officer and treasurer since January 2023, after earlier corporate development and legal roles at nCino ^[4]. April Rieger is chief legal and administrative officer and secretary, and Keith Kettell is chief revenue officer ^[4].

Justin Nyweide of HMI Capital joined the board in February 2025 under a cooperation agreement with standstill and voting terms, and has been lead independent director since July 2025 ^[4][6]. HMI held 6.2% in the proxy, the largest holder listed, followed by Kayne Anderson Rudnick and Capital International at 5.4% each; directors and officers held 1.9% ^[4].

At the Jun 18, 2026 meeting, Jon Doyle drew about 31.9% of votes cast against him and William Spruill about 30.4%, while the two newer directors drew about 1%, our calculations

12. The questions we would ask management, and the calls we are tracking

Question one: why borrow to repurchase stock while cash left for shareholders is still near 10% of revenue?

Question two: what share of subscription cost is Salesforce fees, and how is it priced through 2031?

Question three: how much revenue comes from mortgage software, and how does it move with rates?

Question four: what did the large votes against two directors signal, and how has the board responded?

Question five: how much contract value comes from automation tools priced separately? That answer sets our conviction.

Prediction one: fiscal 2027 revenue lands inside the $644.0M to $647.0M guide (70%).

Prediction two: fiscal 2027 cash left for shareholders, as we define it, is above $50M (65%).

Prediction three: total debt at Jan 31, 2027 is above $250M (60%).

Prediction four: fiscal 2028 revenue grows less than 9% over fiscal 2027 (65%).

Prediction five: shares outstanding on the next 10-K cover are below 105M (55%).

Filing notes. nCino's cash flow statement shows no capitalized software line, so our capital spending figure is property and equipment only ^[3].

The Salesforce agreement allows termination on a change in control in favor of a direct competitor ^[1]. The two directors with the largest votes against were both elected ^[7].

Bottom line: nCino owns the loan file, but the buybacks are ahead of what shareholders kept

nCino holds the loan and account record for more than 2,700 financial institutions and finally produced $60.8M of cash left for shareholders over twelve months ^[2][3]. But growth has slowed to 8.2%, the platform rests on Salesforce, and buybacks of $240.2M were funded partly by a new $200.0M term loan ^[1][3].

We would move to Buy if fiscal 2027 free cash for investors clears $80M while growth holds above 8% and debt starts falling. A further growth slowdown below 7%, or more debt-funded buybacks, would move us to Avoid.

Our call: Hold off, conviction 3 of 5.