nCino (NCNO, Financial) experienced a significant drop of 26% following its Q4 earnings miss, marking the first EPS miss in five years. The company also provided a concerning forecast for Q1 and FY26. Despite announcing a $100 million share repurchase program, the impact has been minimal.

On February 3, Sean Desmond was promoted to CEO. He aims to lead nCino's transition to AI banking, leveraging its strong foundation in cloud banking software. The platform assists banks with lending, onboarding, account opening, and portfolio management, addressing inefficiencies from legacy infrastructure.

During the earnings call, nCino highlighted its expansion into consumer lending, offering a competitive product. However, adoption has been slower than expected, partly due to customers delaying decisions until the completion of the DocFox acquisition.

nCino admitted to overestimating the impact of a potential interest rate drop on mortgage activity. Additionally, sales execution in international markets, particularly Europe, was lacking. Personnel changes have been made to address these issues, which have affected new bookings momentum and contributed to a weak FY26 revenue outlook.

The new CEO remains optimistic, stating that decisive actions have been taken to tackle these challenges. nCino launched a leading consumer lending product and is introducing omni-channel capabilities via nSight. An onboarding add-on is set for Q2 release, expected to unlock new opportunities.

nCino anticipates improved gross bookings growth throughout the year, leading to a reacceleration of subscription revenue growth in FY27. Despite current market volatility, macroeconomic headwinds have eased, and customers are in better financial health. US customers are optimistic about deregulation, which could enable further technology adoption.

Overall, nCino faces a challenging FY26 with a rare EPS miss and disappointing guidance. However, the company is addressing its issues and anticipates improvements in the latter half of the year, with a positive outlook for FY27. Recent interest rate drops may boost mortgage activity.