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RECONCILIATION OF GAAP TO NON-GAAP MEASURES(In thousands, except share and per share data)(Unaudited) Three Months Ended October 31, Nine Months Ended October 31, 2023 2024 2023 2024GAAP total revenues$121,942 $138,797 $352,850 $399,287 GAAP cost of subscription revenues$30,605 $33,769 $89,481 $98,916 Amortization expense - developed technology (3,990) (4,404) (12,431) (12,926)Stock-based compensation (515) (733) (1,314) (2,088)Restructuring charges (12) — (51) — Non-GAAP cost of subscription revenues$26,088 $28,632 $75,685 $83,902 GAAP cost of professional services and other revenues$17,420 $19,976 $52,779 $59,940 Amortization expense - other (82) (82) (247) (247)Stock-based compensation (2,571) (2,940) (6,660) (8,699)Restructuring charges (26) — (118) — Non-GAAP cost of professional services and other revenues$14,741 $16,954 $45,754 $50,994 GAAP gross profit$73,917 $85,052 $210,590 $240,431 Amortization expense - developed technology 3,990 4,404 12,431 12,926 Amortization expense - other 82 82 247 247 Stock-based compensation 3,086 3,673 7,974 10,787 Restructuring charges 38 — 169 — Non-GAAP gross profit$81,113 $93,211 $231,411 $264,391 The following table sets forth reconciling items as a percentage of total revenue for the periods presented.1GAAP gross margin % 61% 61% 60% 60%Amortization expense - developed technology 3 3 4 3 Amortization expense - other — — — — Stock-based compensation 3 3 2 3 Restructuring charges — — — — Non-GAAP gross margin % 67% 67% 66% 66% GAAP sales & marketing expense$38,446 $29,729 $100,551 $89,487 Amortization expense - customer relationships (2,167) (2,736) (6,502) (7,889)Amortization expense - trade name (10,713) (107) (11,921) (254)Amortization expense - other — (28) — (72)Stock-based compensation (4,153) (4,394) (11,194) (12,534)Restructuring charges (24) — (100) — Non-GAAP sales & marketing expense$21,389 $22,464 $70,834 $68,738 GAAP research & development expense$29,043 $33,039 $87,127 $97,291 Stock-based compensation (4,386) (4,208) (11,665) (13,720)Restructuring charges (87) — (352) — Non-GAAP research & development expense$24,570 $28,831 $75,110 $83,571 GAAP general & administrative expense$19,334 $23,108 $59,239 $66,046 Stock-based compensation (4,198) (5,696) (11,136) (15,974)Acquisition-related expenses (211) (3,423) (634) (9,410)Litigation expenses (153) (115) (4,502) (365)Restructuring charges (1) — (6) — Non-GAAP general & administrative expense$14,771 $13,874 $42,961 $40,297 GAAP loss from operations$(12,906) $(824) $(36,327) $(12,393)Amortization of intangible assets 16,952 7,357 31,101 21,388 Stock-based compensation 15,823 17,971 41,969 53,015 Acquisition-related expenses 211 3,423 634 9,410 Litigation expenses 153 115 4,502 365 Restructuring charges 150 — 627 — Non-GAAP operating income$20,383 $28,042 $42,506 $71,785 The following table sets forth reconciling items as a percentage of total revenue for the periods presented.1GAAP operating margin %(11)% (1)% (10)% (3)%Amortization of intangible assets 14 5 9 5 Stock-based compensation 13 13 12 13 Acquisition-related expenses — 2 — 2 Litigation expenses — — 1 — Restructuring charges — — — — Non-GAAP operating margin % 17% 20% 12% 18% GAAP net loss attributable to nCino, Inc.$(16,379) $(5,252) $(43,506) $(19,268)Amortization of intangible assets 16,952 7,357 31,101 21,388 Stock-based compensation 15,823 17,971 41,969 53,015 Acquisition-related expenses 211 3,423 634 9,410 Litigation expenses 153 115 4,502 365 Restructuring charges 150 — 627 — Tax benefit related to acquisition — — — (3,609)Income tax effect on non-GAAP adjustments (237) (451) (616) (1,244)Adjustment attributable to redeemable non-controlling interest (478) 1,286 (526) 2,205 Non-GAAP net income attributable to nCino, Inc.$16,195 $24,449 $34,185 $62,262 Basic and diluted GAAP net loss attributable to nCino, Inc.per share$(0.15) $(0.05) $(0.39) $(0.17)Weighted-average shares used to compute basic and diluted GAAP net loss attributable to nCino, Inc.per share 112,951,553 115,611,833 112,484,017 114,970,622 Basic non-GAAP net income attributable to nCino, Inc.per share$0.14 $0.21 $0.30 $0.54 Weighted-average shares used to compute basic non-GAAP net income attributable to nCino, Inc.per share 112,951,553 115,611,833 112,484,017 114,970,622 Diluted non-GAAP net income attributable to nCino, Inc.per share$0.14 $0.21 $0.30 $0.53 Weighted-average shares used to compute diluted non-GAAP net income attributable to nCino, Inc.per share 115,261,169 117,416,473 114,636,396 116,913,806 Free cash flow Net cash provided by operating activities$5,870 $5,777 $49,137 $65,218 Purchases of property and equipment (619) (680) (3,083) (1,466)Free cash flow$5,251 $5,097 $46,054 $63,752 Principal payments on financing obligations2 (324) (194) (888) (916)Free cash flow less principal payments on financing obligations$4,927 $4,903 $45,166 $62,836 1Columns may not foot due to rounding.2These amounts represent the non-interest component of payments towards financing obligations for facilities.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(Unaudited) Nine Months Ended October 31, 2023 2024Cash flows from operating activities Net loss attributable to nCino, Inc.$(43,506) $(19,268)Net loss and adjustment attributable to redeemable non-controlling interest (1,394) 1,796 Net loss (44,900) (17,472)Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 37,337 26,132 Non-cash operating lease costs 3,581 3,844 Amortization of costs capitalized to obtain revenue contracts 7,368 8,724 Amortization of debt issuance costs 138 60 Stock-based compensation 41,969 53,015 Deferred income taxes 881 (2,496)Provision for bad debt 1,124 25 Net foreign currency losses (gains) 2,275 (658)Loss on disposal of long-lived assets 161 35 Change in operating assets and liabilities: Accounts receivable 35,455 50,184 Costs capitalized to obtain revenue contracts (5,959) (13,199)Prepaid expenses and other assets 3,374 656 Accounts payable 1,184 1,056 Accrued expenses and other liabilities (7,999) (148)Deferred revenue (23,789) (41,604)Operating lease liabilities (3,063) (2,936)Net cash provided by operating activities 49,137 65,218 Cash flows from investing activities Acquisition of business, net of cash acquired — (90,839)Acquisition of assets (356) (450)Purchases of property and equipment (3,083) (1,466)Purchase of investment (2,500) — Net cash used in investing activities (5,939) (92,755)Cash flows from financing activities Investment from redeemable non-controlling interest 983 — Proceeds from borrowings on revolving credit facility — 241,000 Payments on revolving credit facility (30,000) (75,000)Payments of debt issuance costs — (1,382)Exercise of stock options 3,176 2,223 Stock issuance under the employee stock purchase plan 2,698 2,514 Principal payments on financing obligations (888) (916)Net cash provided by (used in) financing activities (24,031) 168,439 Effect of foreign currency exchange rate changes on cash, cash equivalents, and restricted cash (762) (93)Net increase in cash, cash equivalents, and restricted cash 18,405 140,809 Cash, cash equivalents, and restricted cash, beginning of period 87,418 117,444 Cash, cash equivalents, and restricted cash, end of period$105,823 $258,253 Reconciliation of cash, cash equivalents, and restricted cash, end of period: Cash and cash equivalents$100,475 $257,894 Restricted cash included in prepaid expenses and other current assets 5,000 — Restricted cash included in long-term prepaid expenses and other assets 348 359 Total cash, cash equivalents, and restricted cash, end of period$105,823 $258,253 Non-GAAP Financial MeasuresIn nCino’s public disclosures, nCino has provided non-GAAP measures, which are measurements of financial performance that have not been prepared in accordance with generally accepted accounting principles in the United States, or GAAP.
These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially including, but not limited to risks associated with (i) adverse changes in the financial services industry, including as a result of customer consolidation or bank failures; (ii) adverse changes in economic, regulatory, or market conditions, including as a direct or indirect consequence of higher interest rates; (iii) risks associated with acquisitions we undertake, (iv) breaches in our security measures or unauthorized access to our customers’ or their clients' data; (v) the accuracy of management’s assumptions and estimates; (vi) our ability to attract new customers and succeed in having current customers expand their use of our solution; (vii) competitive factors, including pricing pressures, consolidation among competitors, entry of new competitors, the launch of new products and marketing initiatives by our competitors, and difficulty securing rights to access or integrate with third party products or data used by our customers; (viii) the rate of adoption of our newer solutions and the results of our efforts to sustain or expand the use and adoption of our more established solutions; (ix) fluctuation of our results of operations, which may make period-to-period comparisons less meaningful; (x) our ability to manage our growth effectively including expanding outside of the United States; (xi) adverse changes in our relationship with Salesforce; (xii) our ability to successfully acquire new companies and/or integrate acquisitions into our existing organization; (xiii) the loss of one or more customers, particularly any of our larger customers, or a reduction in the number of users our customers purchase access and use rights for; (xiv) system unavailability, system performance problems, or loss of data due to disruptions or other problems with our computing infrastructure or the infrastructure we rely on that is operated by third parties; (xv) our ability to maintain our corporate culture and attract and retain highly skilled employees; and (xvi) the outcome and impact of legal proceedings and related fees and expenses.
