What Happened?

Shares of bank software company nCino (NASDAQ:NCNO) fell 21.4% in the pre-market session after the company reported underwhelming third-quarter financial results. Revenue narrowly outperformed Wall Street's estimates. On the other hand, its revenue guidance for the next quarter missed significantly, and its full-year revenue guidance was only in line with Wall Street's estimates. Overall, this was a softer quarter.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy nCino? Access our full analysis report here, it’s free.

What The Market Is Telling Us

nCino’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. Moves this big are rare for nCino and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 8 months ago when the stock gained 20.3% on the news that the company reported fourth quarter results with revenue in line with analysts' expectations, but its operating income, EPS, and free cash flow significantly beat, painting a picture of stronger profitability. The company's full-year 2024 guidance confirmed this, as its forecasted EPS blew past Wall Street's projections. 

During the quarter, nCino's President and Chief Revenue Officer, Josh Glover, announced he would be stepping down to join another company. Furthermore, on March 18, 2024, nCino announced it would acquire DocFox, a solution provider automating onboarding experiences for commercial and business banking clients. The terms of the deal were not disclosed. DocFox was founded in 2016 and has over 450 global customers. 

Overall, it was a strong quarter for the company. Following the results, Morgan Stanley upgraded the stock's rating from Underweight (Sell) to Equal Weight (Neutral) and raised the price target from $24 to $27.

nCino is up 10% since the beginning of the year, but at $38.14 per share, it is still trading 10.6% below its 52-week high of $42.64 from November 2024. Investors who bought $1,000 worth of nCino’s shares at the IPO in July 2020 would now be looking at an investment worth $416.42.

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