nCino, Inc. (NASDAQ:NCNO) Q3 2023 Earnings Call Transcript

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A – Josh Glover: Each of our segments or deal sizes are in line with where they’ve been. As Pierre commented earlier about just the timing in the market, it’s less of a size impact than it is on a sales cycle duration impact from our perspective.

Alex Sklar : Okay, great. Thank you.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Bob Napoli from William Blair. Your question please.

Unidentified Analyst: Hey! Good evening guys. This is a on for Bob. Our first question was on around gross margin. Could you kind of remind us and speak to your confidence of tracking towards your 70% gross margin target over time. Some of the drivers that we might see some margin expansion from. I think in the past you’ve talked about international as being accretive to margins, that would be helpful. Thank you.

David Rudow: Yes, we are still you know at kind of the long term model at 70%. We do have a product mix of benefit as we sell less to the community regional space. We have higher margin on that business, because we can’t bundle sales force feed into that. Also as we expand our nIQ product offering, that’s on AWS and that comes at a much higher gross margin. We will see efficiencies in support. We’ve made a lot of investments on the support side. And then on the professional services side you know we would expect to see margins continue to improve as we look out over the next couple years as well.

Unidentified Analyst: Great, thank you. And just for the follow-up, could you kind of give an update on some of the competitive dynamics in retail I guess since the last quarter if they’ve changed at all meaningfully, as well as any update on cross sell of retail with commercial clients? Thanks.

A – Pierre Naudé: You know our retail count is up 30% year-over-year. The competitive landscape hasn’t really changed there. It’s a rip-and-replace market, we’re making good progress. I believe our platform story is superior and people like that. It’s a client centric approach to banking. So we are on track there and meeting and beating our expectations. Deposit account opening is up 25% year-over-year. So that whole client centric platform story is playing well with us. We are finding our small business offerings to include a retail-like experience, as well as the low end of small business and all of those road maps, as people see what we are doing and how we are client focused helping the bank to actually get there and continue to invest in innovation. I think that innovation mindset is playing out in the market and is making us the preferred vendor, so I feel good about those new products.

Josh Glover: Also, we spoke about it in the prepared comments, but the validation points of the single platform deals, multiple community regional accounts, those are really nice accounts that came onboard with our known commercial solution, but they also rolled in retail, because they want to be able to connect with their customers, to take care of them really well across multiple products. From our perspective, that’s a good validation point.

Unidentified Analyst: Understood. Thanks very much.

Operator: Thank you. And our next question comes from the line of Jason Adler from €“ Ader, pardon me, from MoffittNathanson SVB. Your question please.

Jackson Ader: Great! Thanks. Hey guys! Thanks for taking my question. The first one is on the pipeline. It’s like you’re kind of seeing customers’ maybe €“ I understand take a little bit longer to sign the deals. But do you expect when the pipeline starts to build and there’s a little bit of a backup or a backlog in there, have you seen customers in the past be anticipatory on the other side? You know when things start to look a little bit better, do they go ahead and does the sales cycles start to actually contract or are these just conservative banks and they wait for the coast to be absolutely clear before they start resuming normal transactions again?

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