Challenges in Mortgage Segment Hurt nCino, Analyst Downgrades Stock
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Piper Sandler
analyst Brent A. Bracelin downgraded
nCino, Inc.
(NASDAQ:
NCNO
) to Neutral from Overweight, with
a price forecast of $38.
The company reported total revenues for the third quarter of $138.8 million,
a 14% increase from the previous year
. Subscription revenues also grew 14% year-over-year to $119.9 million, with a non-GAAP operating margin of 20%, up approximately 350 basis points.
After the results, Bracelin reduced the 2025 revenue outlook by about $20 million due to lower mortgage and core assumptions, partly offset by FullCircl revenue.
Despite the AMC sell-off and a portion of recent gains being lost, the analyst lowered the rating but will monitor cross-sell momentum and the potential recovery in mortgage volumes in the second half of 2025.
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The analyst noted that unexpected churn in the mortgage segment (15% of sales) outweighed a $6 million quarter-over-quarter revenue increase. This was the largest sequential revenue gain in over two years.
The analyst highlighted that strong cost management, even with the integration of DocFox, led to a significant margin improvement, reaching a record 20.2%, which was much higher than the previous quarter’s 14.6%, first quarter’s 19.1% and the mid-point guidance of 15.7%.
The analyst expects fourth-quarter mortgage segment growth to slow to 3.5% from 16% last quarter.
This slower growth for a $74 million product category lowers expectations for a recovery next year until mortgage volumes significantly improve, Bracelin adds.
The analyst revised FY25 revenue estimates down to $539.8 million from $541.5 million, but raised the EPS estimate to 72 cents from 69 cents.
Price Action:
NCNO shares are trading lower by 12.10% to $37.36 at the last check Thursday.
Read Next:
Latest Ratings for NCNO
|
Date |
Firm |
Action |
From |
To |
|---|---|---|---|---|
|
Jan 2022 |
Keybanc |
Maintains |
Overweight |
|
|
Jan 2022 |
Piper Sandler |
Maintains |
Overweight |
|
|
Jan 2022 |
Barclays |
Maintains |
Equal-Weight |
View More Analyst Ratings for NCNO
View the Latest Analyst Ratings
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Challenges in Mortgage Segment Hurt nCino, Analyst Downgrades Stock
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