On August 25, nCino (NASDAQ:NCNO) posted second-quarter fiscal 2027 results that outran the company’s own guidance on every line item that matters. Total revenue rose 8% year over year to $161 million, subscription revenue climbed 10% to $143.5 million, and free cash flow jumped 170% to $34 million. Behind those headline numbers sits a company pushing its banking customers toward an AI-heavy pricing model while one legacy piece of the business, mortgage lending, keeps losing ground to a stubbornly high interest rate environment.
Big Banks Keep Coming Back
The clearest signal in nCino’s quarter came from its largest customers. Four of the company’s top 20 US enterprise accounts, representing institutions holding more than $900 billion in assets, renewed their contracts ahead of schedule and increased their annual contract value by more than 10% on average. Those customers made the move specifically to gain access to nCino’s expanding AI toolset, and 48% of total annual contract value now sits on the new platform pricing model, up from 40% just one quarter earlier.
That AI push is already producing measurable results. One enterprise customer told nCino it expects to save 160,000 hours a year, worth more than $5.5 million, just from using the company’s Locate and File banking adviser tool. More than 230 customers have now purchased AI intelligence units, and management said it has begun charging some of them for additional units after they burned through their initial bundles. International expansion added to the momentum, with non-US subscription revenue up 13% to $30.9 million on new customer wins in Japan and Germany.
The company’s capital moves backed up that confidence. Non-GAAP operating income grew 36% to $40.8 million, professional services margin improved 600 basis points to 3%, and nCino repurchased 10.2 million shares for $165 million during the quarter, including the completion of a $100 million accelerated buyback program. The board then authorized another $100 million in repurchases, and full-year guidance moved higher across the board.
Mortgage Rates Keep Biting
Not every part of the business is moving in the same direction. US mortgage subscription revenue fell 1% year over year to $20.6 million, and management cut its forecast further, now expecting about $20 million in the third quarter and $18.5 million in the fourth, reductions of $700,000 and $1.2 million from prior guidance. The culprit is the same one that has dogged the mortgage industry for two years: rates that have stayed higher for longer than expected, which is pushing independent mortgage banks toward consolidation and away from nCino’s platform.
That pressure shows up in the churn outlook too. nCino still expects $25 million in churn for the fiscal year, but roughly a third of that is now tied to mortgage customers, a mix shift weighing on subscription revenue in the back half of the year even though total churn guidance hasn’t changed. Professional services revenue also declined 3% year over year, a byproduct of management choosing to prioritize profitability over volume in that segment rather than chase growth.
Wall Street Still Split
Hedge fund ownership of nCino fell from 40 funds to 34 in the most recent quarter, a pullback that suggests some institutional investors trimmed positions even as the business accelerated. Short interest sits at 16.93% of the float, a level that points to a substantial bear camp still betting against the stock. Yet shares trade at a forward price-to-earnings ratio of just 14.60, as of September 2, a modest multiple that doesn’t look like it prices in much of the AI-driven growth management is describing.
Where The Story Goes Next
nCino’s quarter shows a company in transition, leaning hard into AI-driven pricing while its legacy mortgage business shrinks under the weight of interest rates. The enterprise renewals and rising platform adoption suggest the AI push is resonating with the customers who matter most. For that momentum to keep showing up in the numbers, the intelligence-unit consumption management described will need to keep expanding beyond early adopters.
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