nCino (NASDAQ:NCNO) reported a stronger-than-expected first quarter of fiscal 2027, with executives highlighting accelerating subscription revenue growth, improved profitability and early customer adoption of the company’s artificial intelligence offerings.
Chief Executive Officer Sean Desmond said the company “delivered a great start to the year,” outperforming guidance across key metrics. He said subscription revenue growth accelerated to 12% and non-GAAP operating margin improved to 28%, allowing nCino to achieve the Rule of 40, a commonly cited software industry benchmark combining growth and profitability.
“Every AI interaction on our platform is auditable, traceable, and governed by the same standards our customers apply to their human workforce,” Desmond said. “Because in banking, intelligence without accountability isn’t intelligence, it’s a liability.”
First-quarter revenue and profitability top expectations
Chief Financial Officer Greg Orenstein said total revenue for the quarter was $159.4 million, up 11% year over year. Subscription revenue was $140.9 million, up 12% year over year, or 11% in constant currency. Professional services revenue was $18.5 million, flat from a year earlier.
Orenstein said the first quarter included a “significant sequential dollar increase” in subscription revenue of about $7.5 million, helped by record gross bookings in the fourth quarter of fiscal 2026, earlier deal timing and revenue recognition under nCino’s new pricing model.
Non-GAAP operating income was $44.5 million, or 28% of total revenue, up 79% year over year. Orenstein said non-GAAP professional services gross margin improved to 10%, up 1,100 basis points year over year, contributing about $1 million to operating income outperformance.
Free cash flow was $80.8 million, up 54% year over year. Orenstein noted that the first quarter is typically nCino’s largest free cash flow quarter because it follows seasonally strong fourth-quarter bookings.
Non-U.S. revenue also continued to grow. Total non-U.S. revenue was $36.4 million, up 15% year over year, while non-U.S. subscription revenue was $31.3 million, up 21%, or 16% in constant currency.
AI adoption and platform pricing take center stage
Desmond said more than 40% of nCino’s annual contract value had transitioned to the company’s new platform pricing model by the end of the first quarter. He said customers must adopt that pricing model to use nCino’s AI capabilities.
The company monetizes its platform through platform fees and sales of AI token bundles, which it calls “Intelligence Units.” Customers use the units for AI tasks ranging from simple chat-based inquiries to more compute-intensive workflows such as continuous loan portfolio monitoring.
Desmond said more than 200 customers had their initial bundle of Intelligence Units as of the end of the quarter. He said nCino has intentionally sized those initial bundles to encourage adoption and experimentation, rather than to maximize near-term revenue.
“Our near-term strategic goal is to maximize and accelerate the adoption of our AI features,” Desmond said. He added that usage of Banking Advisor, nCino’s AI product, was up more than 38 times in May compared with October, with several business days still remaining in the month.
During the question-and-answer portion of the call, Desmond said some customers had already consumed their initial Intelligence Unit bundles and that nCino had addendums in front of customers to purchase additional units. He described Intelligence Unit consumption as “the future of this company.”
Customer examples and implementation efficiencies
Desmond highlighted ConnectOne, a $14 billion institution in the Northeast and an nCino customer since 2017, as an example of early AI deployment. He said ConnectOne contracted for its first bundle of Intelligence Units and began rolling out Banking Advisor in the fourth quarter of fiscal 2026.
According to Desmond, nCino’s forward deployed engineering team worked with ConnectOne in March to benchmark operations and identify areas where Banking Advisor could reduce friction. He said the technology can help automate tasks such as creating relationship records and updating collateral records in bulk.
Desmond also said investments in professional services AI tools and methodologies are compressing professional services hours per engagement by more than 40%. He said the company is also seeing faster product development cycles, with some work that previously took more than a year now being completed in under 90 days.
Within product development and engineering, Desmond said about 57% of nCino’s code was written with AI assistance in the first quarter of fiscal 2027, up from about 21% in the first quarter of fiscal 2026. He said the goal is not simply writing more code, but moving faster across the full product lifecycle.
Guidance raised for fiscal 2027
For the second quarter of fiscal 2027, nCino expects total revenue of $157.75 million to $159.75 million and subscription revenue of $140.25 million to $142.25 million. At the midpoint, those ranges imply total revenue growth of 7% and subscription revenue growth of 8% year over year.
Orenstein said second-quarter guidance reflects a difficult comparison in the U.S. mortgage business, where subscription revenue grew 22% in the second quarter of fiscal 2026. The company expects U.S. mortgage subscription revenue to decline 2% year over year in the second quarter, citing elevated mortgage rates and a weaker seasonal benefit than last year.
For fiscal 2027, nCino raised its total revenue outlook to $642 million to $646 million, up from a prior range of $639 million to $643 million. The company now expects subscription revenue of $571.5 million to $575.5 million, up from prior guidance of $569 million to $573 million.
nCino also raised its non-GAAP operating income outlook to $166 million to $171 million, compared with a prior range of $165 million to $170 million. Free cash flow guidance was increased to $135 million to $140 million, up from $132 million to $137 million.
Orenstein said the company continues to expect net additions to annual contract value of $60 million to $65 million on a constant-currency basis, representing cumulative ACV of $662.5 million to $667.5 million. He said nCino remains focused on shifting its Rule of 40 mix over time more toward subscription revenue growth than operating margin.
Share repurchases and market outlook
nCino repurchased approximately 6.1 million shares during the first quarter under its December 2025 stock repurchase program and March 2026 accelerated share repurchase program. Orenstein said the repurchases were made at an average price of $15.20 per share, totaling $93.1 million. The company had $65 million remaining under its December 2025 repurchase authorization.
Executives said demand remains healthy across commercial banking, credit unions and international markets. Desmond said nCino is seeing strength in continental Europe and Japan, as well as opportunities in Southeast Asia. He also said the company’s credit union-focused go-to-market team is beginning to show results.
Asked about competition, Desmond said nCino continues to view its platform breadth as a differentiator, especially as customers evaluate AI capabilities. He said the market remains competitive, including both long-standing vendors and newer entrants, but characterized rivals largely as point solutions rather than full platforms.
Desmond closed by reiterating that nCino sees AI as a long-term opportunity tied to its embedded relationships with financial institutions and its experience in regulated banking workflows.
About nCino (NASDAQ:NCNO)
nCino, Inc provides a cloud-based banking operating system designed to modernize and streamline processes for financial institutions. Built on a software-as-a-service (SaaS) model, the nCino Bank Operating System integrates key banking functions into a unified platform, enabling banks and credit unions to enhance efficiency, reduce risk and improve customer experiences.
Founded in 2012 as a spinoff from Live Oak Bank, nCino launched its flagship offering to address the needs of commercial and retail lenders seeking to replace legacy systems.
