Episode Details

nCino (NCNO) Q2 FY2027 — NCNO went into the print at $20.81, closed the reaction session at $21.51 (+3.4%) and $22.99 two sessions later - 10.5% up on the print, and 64% above its March low of $14.01. nCino grew revenue 8.2% to $161.0m and swung GAAP operating income to +$13.6m from -$9.3m. But in the same six months it spent $175.7m retiring its own stock against $114.8m of free cash flow - and the $60.9m shortfall is within $1.0m of the $61.9m of net new debt on the balance sheet. The 10-Q says it outright: the repurchase was funded with cash on hand and term loan proceeds. The buyback worked - $16.16 average against $22.99 today. The board has just authorised another $100m at the higher price. THE CALL: SELL (3/5, MODERATE) — base-case value ~$17.33 vs ~$22.99 today. KEY METRICS: - Revenue $161.0m, +8.2% YoY, vs a $159.2m bar; subscription $143.5m, +9.7%; services $17.5m, -2.9% - GAAP operating income +$13.6m vs -$9.3m; non-GAAP operating margin 25.4% from 20.2% - but DOWN 256bps sequentially from 27.9% - GAAP diluted EPS $0.05. nCino publishes NO adjusted EPS - the reconciliation stops at operating income - so the widely-quoted $0.27 'miss' compared a GAAP print to a non-GAAP bar. Rebuilt properly, non-GAAP EPS is $0.31: a beat - Six months: $175.7m of buybacks vs $114.8m of free cash flow - a $60.9m shortfall, within $1.0m of $61.9m of net new debt - Debt $213.5m to $275.4m; $200m term loan taken 30 March 2026, matures Oct 2029, applicable rate 5.64% - Buyback: 10.83m shares at a $16.16 average; diluted share count -8.6% YoY; a new $100m authorisation struck at $22.99 - Guide implies only 1.1% revenue growth over the next six months (2.3% annualised): $161.0m to $162.3m guided to $162.8m implied - The beat did not flow through: revenue beat by $1.9m, the full-year guide rose $1.5m at the midpoint - Mix: US non-mortgage subs +11.4% and international subs +12.7%; US mortgage -1.0% and the UK book -7.2% - Stock comp $63.8m annualised, 9.9% of guided revenue. Charge it and $139.5m of guided FCF becomes $75.7m of owner earnings - Enterprise value $2,623m: 4.1x guided revenue, 18.8x guided FCF, 34.7x owner earnings - Market cap $2,431m on the 10-Q cover's 105.74m shares - our data vendor's $2,519m is 3.6% high on a stale share count - Reverse DCF: $22.99 requires 11.0% revenue CAGR for five years. The company guides 1.1% over six months - Our fair value $17.33 (bear $8.80, base $17.27, bull $32.42) vs $22.99 - 24.6% downside What to watch: A Q3 above the top of the guide with the mortgage line growing again, the UK returning to growth, or stock compensation below 7% of revenue with the operating margin held. Any of those moves our owner-earnings number a long way. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.