NCNO

nCino is a vertical SaaS platform for financial institutions selling multi-year (3–5 year) non-cancelable subscriptions — a structurally durable, recurring revenue base. FY2026 marks a genuine inflection: the first GAAP profit ($5.18M) after four straight years of losses (-$49M, -$103M, -$42M, -$38M), and far more importantly, operating cash flow jumped 63% to $90.1M against just $7.5M of capex, implying roughly $83M of free cash flow. GAAP earnings are optically depressed by stock comp and acquisition-related amortization (D&A $42.3M), which is why the headline P/E of 316 is meaningless; the relevant lenses are P/S of 3.0 and an EV (~$1.72B net of cash) of roughly 21x free cash flow — undemanding for a profitable, cash-generative subscription business. The balance sheet is clean: $1.06B equity, liabilities/equity just 0.55x, no leverage stress. Management showed conviction by repurchasing $125M of stock (~7% of the market cap), which both signals a view that shares are cheap and offsets SBC dilution, holding share count roughly flat (-1.6%).

The case against paying up is real and limits this to a hold. Revenue growth has decelerated every single year — from ~49% (FY22→23) down through 17%, 13%, to just 10.0% in FY2026 — and the MD&A itself cites only an 11.7% three-year CAGR. Gross margin of 60.6% is mediocre for software (best-in-class SaaS runs 75%+), reflecting a heavy professional-services/implementation mix that caps operating leverage; operating margin is a razor-thin 0.6% and ROE is 0.5%. The $125M buyback also drew cash down 27% to $88.4M, so capital return is being funded partly out of the balance sheet rather than purely from FCF.