NCNO - upcoming SaaS IPO in banking sector

I used to live near Encino (CA), so when I saw “nCINO” as an upcoming IPO, I looked closer. There is an excellent writeup by Bert Hochfeld behind the Seeking Alpha paywall for those with access. Participants on this board may wish to keep an eye on it, and critiques and insights from those with banking backgrounds would be welcome.

From EDGAR: an SaaS company providing software to financial institutions to streamline customer and employee interactions. It is headquartered in Wilmington NC with offices in selected world cities. It was founded around 2011. It derives revenues via contracts with customers (banks) and there are a variety of services and subscriptions. Revenue is recognized upon the company satisfying a performance obligation.

NCNO attempts to make a bank’s clients experience increased ease of use. Therefore, the model for NCNO is “land and expand” with increasing numbers of bank customers followed by sales of additional products to a given bank. It has not achieved profitability and I am not familiar enough with this class of company to say where it lies relative to similar IPOs; but it continues to focus on growth so losses as a percentage of income may rise for a while.

20 million shares are anticipated for the IPO with 81 M shares outstanding.
For fiscal years 2018 2019 and 2020:
Revenues 58M 91M 138M
Expenses 46M 68M 102M
Loss 18M 23M 28M
Net Loss 18M 22M 27M
Outstanding Shares 68M 74M 78M

Major holders include Salesforce, and the company operates on their (unified) platform, which prevents the formation of “silos.” Revenue growth is reported at over 50% and a quickly growing ARR. However, the opinion of some analysts is that this particular growth rate won’t be sustained, but on the other hand the nature of the market calls for long term consistency (at least in the course of a given year, as there is some seasonality and introduction of products can be both complex and affected by governmental regulations) because the TAM is large, estimated in the EDGAR filing at $10B. This gives them a long glide path over many years to acquire more customers and provide them with more products.

There appears to be no recent large acquisitions. In my opinion it will likely maintain a persistent premium relative to sales, etc, in part because it could become an eventual acquisition target itself by a larger corporation(s)

The C suite players and compensation are easily found in the EDGAR filling.

Hope everybody had a safe July 4th.

Best,
Brian

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For those on this board that have an interest in DocuSign and have been monitoring the impending nCino IPO, a couple nuggets of interest:

“Built on top of Salesforce’s real-time, multitenant architecture, nCino’s Bank Operating System provides an end-to-end cloud banking platform. U.S. … As an industry leader in document solutions, DocuSign complements nCino’s comprehensive document generation functionality.”

https://www.docusign.com/partner/ncino-0

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