NCNO Q3 Deep Dive: AI Adoption and Platform Expansion Drive Mixed Market Reaction

Banking software provider nCino (NASDAQ:NCNO) reported revenue ahead of Wall Streets expectations in Q3 CY2025, with sales up 9.6% year on year to $152.2 million. The company expects next quarter’s revenue to be around $147.5 million, close to analysts’ estimates. Its non-GAAP profit of $0.31 per share was 49.9% above analysts’ consensus estimates.

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StockStory’s Take

nCino’s third quarter was marked by revenue and non-GAAP profitability that exceeded analysts’ expectations, yet the market responded negatively, reflecting concerns highlighted by management about near-term headwinds and competitive pressures. CEO Sean Desmond pointed to strong momentum in AI adoption and platform expansion across customer segments, but also noted that discretionary spending by financial institutions remains constrained, driving a shift toward more targeted, efficiency-focused technology investments. Desmond emphasized, “Banks remain very aggressive on their tech investment with AI driving the narrative,” while acknowledging that shifts in customer purchasing patterns require continued operational discipline.

Looking ahead, nCino’s guidance is anchored in expectations for continued adoption of its AI-driven Banking Advisor, broader platform pricing transitions, and international expansion, particularly in EMEA and Japan. Management cautioned that seasonality and the timing of large renewals may create quarterly variability, but CFO Gregory Orenstein stressed that cost discipline and efficiency gains from AI are expected to support margin expansion. Orenstein explained, “We’re seeing opportunities in the business for further efficiency, and yes, we're seeing it from AI as well as just very healthy cost discipline across the organization.”

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to accelerating adoption of AI capabilities, expanding customer relationships, and solid execution in both domestic and international markets.

• AI adoption accelerates: Over 110 financial institutions have now purchased Banking Advisor intelligence units, with use cases ranging from proactive risk monitoring to automating policy exceptions. Management highlighted that initial customer adoption is progressing through pilot phases to broader deployment, reflecting growing trust in AI-powered automation.
• Platform expansion with large banks: Two top 15 U.S. banks expanded their commercial commitments, while a $5.5 billion community bank broadened usage to include multiple lending lines, more than doubling its annual commitment. These wins showcase cross-sell opportunities and the value proposition of nCino’s unified platform.
• International market gains: nCino signed a major regional bank in Japan for mortgage lending and saw three expansion deals in the country, reinforcing management’s focus on international growth. EMEA progress was also noted, particularly with Integration Gateway API renewals in Europe, signaling growing demand for global banking solutions.
• Platform pricing transition: About 27% of annual contract value (ACV) has been moved to new platform pricing, with management crediting demand for AI features as a key driver. Early renewals and price uplifts were attributed to customer interest in accessing new technology sooner.
• Operational efficiency gains: The company achieved operating margin expansion by leveraging AI internally and maintaining cost discipline following a May restructuring. Management believes these actions have made the organization leaner and more responsive, setting the stage for improved profitability.

Drivers of Future Performance

Management expects continued momentum from AI product adoption, international expansion, and further platform pricing transitions to shape next quarter and full-year results.

• AI-driven growth initiatives: Broader deployment of Banking Advisor and digital agents is central to management’s growth outlook, with early adopters reporting efficiency gains and increased interest from risk management teams. The company expects a spike in AI adoption as more customers move from pilot to production environments.
• International and cross-segment expansion: Management highlighted that EMEA and Japan are poised to outpace overall company growth, driven by focused sales efforts and new product offerings tailored to regional banking needs. The recently retooled EMEA leadership team is expected to be a catalyst for pipeline conversion.
• Margin and pricing tailwinds: Ongoing platform pricing transitions and AI-driven operational improvements are projected to support margin expansion. Management cautioned, however, that seasonality, the timing of renewals, and variability in professional services may create quarterly fluctuations, requiring continued cost discipline.

Catalysts in Upcoming Quarters

Looking forward, the StockStory team will closely watch (1) the pace of AI Banking Advisor adoption and expansion to broader customer segments, (2) successful execution of platform pricing transitions and early renewals, and (3) acceleration of international deals, particularly in EMEA and Japan. Additional focus will be on the impact of operational efficiency initiatives and gross margin trends as the company advances its AI and automation strategy.

nCino currently trades at $24.30, down from $25.57 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).

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