Piper Sandler analyst Brent A. Bracelin made the decision to downgrade nCino, Inc. from an Overweight to a Neutral rating, along with a price forecast of $38. The company's third-quarter report revealed a 14% increase in total revenues to $138.8 million compared to the previous year, with subscription revenues also growing by 14% year-over-year to $119.9 million. The non-GAAP operating margin saw a significant improvement, reaching 20%.
As a response to the quarterly results, Bracelin adjusted the 2025 revenue outlook downward by approximately $20 million, citing lower mortgage and core assumptions, albeit partly offset by FullCircl revenue. Despite recent market fluctuations and some loss in gains, the analyst emphasized the importance of monitoring cross-sell momentum and potential recovery in mortgage volumes for the second half of 2025. Bracelin highlighted unexpected churn in the mortgage segment and its impact on sales, outweighing a substantial quarter-over-quarter revenue increase of $6 million, the largest in over two years.
With a focus on strong cost management and margin improvement, the integration of DocFox aided in achieving a record operating margin of 20.2%, showing significant progress compared to previous quarters. Looking ahead, the analyst anticipates a slowdown in fourth-quarter mortgage segment growth to 3.5% from the previous 16%, which sets lower expectations for recovery until mortgage volumes demonstrate significant improvement. Bracelin revisited the FY25 revenue estimates, lowering them to $539.8 million from $541.5 million while increasing the EPS estimate to 72 cents from 69 cents.NCNO shares are currently trading lower at $37.36, reflecting a 12.10% decrease.