nCino, Inc. (NCNO): A Bull Case Theory 

We came across a bullish thesis on nCino, Inc.  on Random walk’s Substack by Moses Sternstein. In this article, we will summarize the bulls’ thesis on NCNO. nCino, Inc. ‘s share was trading at $30.40 as of September 9th. NCNO’s forward P/E was 37.88 according to Yahoo Finance.

nCino (NCNO) is a cloud banking platform that provides workflow solutions for smaller banks, covering areas like account management and mortgage onboarding. Its product is highly sticky, generating 90% recurring revenue with 40% incremental margins, benefiting from a heavily regulated market with high barriers to entry. The company has demonstrated strong pricing power, implementing 5–7% price increases, although approximately 4% of revenue is linked to SVB and First Republic. With only 20% penetration of $1B+ loan banks, nCino has significant room for growth, further supported by strong data connectivity across markets and a nascent AI product that currently reaches just 20% of its potential user base.

Despite its growth potential, nCino trades at roughly 4x earnings, representing a 50% discount to vertical SaaS peers. This valuation reflects the company’s dependence on loan volume, which has been depressed by lower mortgage origination activity, yet revenues continue to expand. Recent pressure on the stock followed Insight Ventures’ exit of a 33% position, signaling some near-term investor caution. The competitive landscape, while moderately protected by regulation, is not entirely unchallenged, with players such as Better Mortgage and Morty operating in adjacent spaces. Additional uncertainty arises from an ongoing accounting investigation, which adds a layer of risk for investors.

Overall, nCino represents a vertically focused SaaS business with sticky, high-margin revenue and clear growth potential, especially in underpenetrated $1B+ loan banks. While its current valuation is discounted, investors should weigh exposure to mortgage-dependent banks, regulatory dynamics, competitive threats, and pending investigations against the potential for long-term expansion in digital banking workflows.

Previously we covered a bullish thesis on JFrog Ltd. (FROG) by Elliot in September 2024, which highlighted Artifactory commoditization risks, the shift toward security, and adoption of annual cloud contracts supporting long-term growth. The company’s stock has appreciated approximately 77.76% since coverage. Moses Sternstein shares a similar focus on SaaS growth and sticky revenue but emphasizes nCino’s exposure to smaller banks, mortgage volume, and early-stage AI adoption.

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Disclosure: None.