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Hello, everyone and welcome to nCino Third Quarter Financial Results Conference Call for the year 2025. At this time, all participants are in a listen-only mode. After the speaker's presentation there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. Now I will pass the call over to the Director of Investor Relations, Harrison Masters. Please proceed.

Good afternoon, and welcome to nCino's third quarter fiscal 2025 earnings call. With me on today's call are Pierre Naude, nCino's Chairman and Chief Executive Officer, and Greg Orenstein, nCino's Chief Financial Officer. During the course of this conference call we will make forward-looking statements regarding trends, strategies, and the anticipated performance of our business. These forward-looking statements are based on management's current views and expectations, entail certain assumptions made as of today's date, and are subject to various risks and uncertainties described in our SEC filings and other publicly available documents, the financial services industry, and global economic conditions. nCino disclaims any obligation to update or revise any forward-looking statements. Further, on today's call, we will also discuss certain non-GAAP metrics that we believe aid in the understanding of our financial results. A reconciliation to comparable GAAP metrics can be found in today's earnings release, which is available on our website and as an exhibit to the Form 8-K furnished with the SEC just before this call, as well as the earnings presentation on our investor relations website at investor.ncino.com. With that, I will turn the call over to Pierre.

Good afternoon, and thanks for joining us today. We are very pleased with our third quarter financial results, once again exceeding expectations for both revenues and non-GAAP operating income. Our sales momentum increased in the third quarter, with gross bookings accelerating quarter-over-quarter and year-over-year. The team demonstrated solid execution across the globe, signing over 30 multi-solution deals and generating more gross bookings from net new customers than the last two quarters combined. Turning to specific sales highlights from the third quarter, our US community and regional and US enterprise businesses both again had strong sales quarters, and both are well on their way to exceeding their gross bookings targets for the year. Of note, in the [CNR] (ph) space was the signing of an over $10 billion credit union for commercial lending, small business lending, portfolio analytics, and banking advisor under our new pricing framework, which Greg will discuss further. In the US enterprise market, we continue to see strength with expansion sales, including signing an agreement for our small business solution with an $80 billion bank, increasing ACV for that account by approximately 15%. The scope of this expansion is initially focused on solving a key challenge for compliance with Dodd-Frank 1071, but will be part of a larger journey to automate the bank's small business lending processes and consolidate multiple legacy systems onto nCino. I'm also pleased to announce that shortly after the end of the third quarter, our U.S. enterprise team signed a five-year multi-solution deal also under our new pricing framework with a top 40 bank in the U.S. for commercial lending, small business lending, treasury management, automated spreading, pricing and profitability, and banking advisor. Our financial results also reflect some momentum in mortgage, even as mortgage rates remain elevated despite the reduction in the federal funds rate. We added 11 new mortgage logos in the U.S. in the quarter, including four banks and the farm credit institution, though we did see slightly higher churn due to IMB M&A. Our average mortgage customer ACV is 15% higher than a year ago. Highlighting the progress we've made in aligning with larger mortgage lenders over the past couple of years and with bundling products for this market. As we previewed on last quarter's call, we saw some increased momentum in the national markets. You would have seen a press release in August announcing Tokushima Taisho Bank as a new customer in Japan using nCino for commercial lending. This agreement, signed in the third quarter, makes Tokushima Taisho our largest customer in Japan. We are honored to partner with Tokushima Taisho to enhance the value it brings to both its corporate clients and its employees. I was in Japan just a couple of weeks ago, visiting customers and prospects, and left more excited than ever about the opportunity we have in that market. In the third quarter, the EMEA team signed an expansion agreement with the largest bank in Norway, bringing the full business bank onto nCino, as well as ESG reporting capabilities, banking advisor and credit portfolio management. The expansion of this customer relationship should serve to continue building our brand awareness in the Nordics and EMEA at large. The EMEA team also signed our first customer in Luxembourg in third quarter for a joint commercial and mortgage lending solution. The ongoing emphasis on regulation in Europe continues to be an opportunity for nCino. For example, the Digital Operational Resilience Act, or DORA, is designed to enhance the operational resilience of digital systems that support financial institutions operating in European markets. As such, financial institutions are looking to aggressively reduce the number of vendors they are using in an effort to mitigate risk and become more efficient. Vendor consolidation is a key priority for many of the institutions we speak with, and the nCino platform is the ideal solution for a financial institution on a global basis to run its lending, account opening, onboarding, and ongoing portfolio management needs. Turning to Banking Advisor, we continue to be quite pleased with the early traction we have seen. We added 11 new Banking Advisor customers in the quarter across the globe, with customers going live in just a few weeks. As our new pricing framework gets rolled out we plan for Banking Advisor to be part of every new deal and renewal. We expect this to be well received based on customer feedback for Banking Advisor as well as for the new pricing framework. In the third quarter, we announced the acquisition of FullCircl, which we subsequently closed on November 5th. This transaction is just the latest example of nCino utilizing an acquisition to strategically expand our platform and grow the wallet share opportunity within our large and happy customer base. The acquisition of FullCircl brings additional depth to our customer onboarding capabilities with an initial focus on the UK and growing applicability across Europe. Following the successful acquisition of DocFox earlier this year, which address the user experience for onboarding commercial customers, FullCircl marks another step forward in advancing and expanding our onboarding capabilities by adding data aggregation components to the platform. Today, onboarding, which is the process by which financial institutions verify the legitimacy of a prospective client or business for the prevention of things such as money laundering and fraud is a highly manual and time intensive process with a lot of complexity, particularly when onboarding larger and more sophisticated organizations. FullCircl aggregates a premium data supply that our customers would otherwise be gathering from fragmented sources. Access to this data within the nCino platform will enable financial institutions to streamline application processes and improve client lifecycle management across other processes being performed on nCino, yielding a powerful combined integrated offering. We currently have 10 mutual customers in the UK, and we believe all our UK clients can benefit from the combined businesses as we look to further expand this offering across the channel to continental Europe to create even more cross-sell opportunities. Based on the onboarding capabilities we brought onto the platform this year with DocFox and FullCircl, we believe we have increased the size of our global SAM by approximately $800 million based on observed attach rates within our mutual customers. As evidenced by these acquisitions and recent enhancements developed by our internal product development organization, our focus across the business remains on delivering greater efficiencies that create real business value for our customers. In the recent issue of American Banker, the President and CEO of First Horizon spoke about tangible economic value delivered with our new deal proposal feature. We shared that the deployment of this feature has cut 1,500 hours in staff work on a yearly basis with 44% fewer screens, 21% fewer clicks, and 20% fewer required fields when filling out digital forms for internal tasks. It's important to note that these improvements are compared to an earlier and sooner experience demonstrating the ongoing innovation and value we deliver for customers long after their initial deployment. In the third quarter, we also announced Joaquín de Valenzuela as the new Managing Director for our EMEA operations. Joaquin has extensive experience leading large cross-functional teams and go-to-market efforts across the European continent. We look forward to building on the momentum created by existing EMEA leadership, especially as we add the capabilities of FullCircl to the platform. With that, I will turn the call over to Greg.

Thank you, Pierre, and thanks everyone for joining us this afternoon to review our third quarter fiscal 2025 financial results. Please note that all numbers referenced in my remarks are on a non-GAAP basis unless otherwise stated. A reconciliation to comparable GAAP metrics can be found in today's earnings release, which is available on our website and it is an exhibit to the Form 8-K furnished with the SEC just before this call. As Pierre noted, we are very pleased with our third quarter financial results. Total revenues for the third quarter of fiscal 2025 were $138.8 million, an increase of 14% year-over-year. Subscription revenues for the third quarter were $119.9 million, also an increase of 14% year-over-year, representing 86% of total revenues, both ahead of the top end of our guidance. Mortgage subscription revenues were $20.7 million, or 17% of subscription revenues in the quarter, representing year-over-year growth of 16%. Mortgage subscription revenues outperformed our previous expectations for the quarter due in part to completing the rollout and go live of a large national home builder which we had expected to take place in the fourth quarter. Mortgage churn in Q3 was approximately $3 million, slightly higher than our expectations due to M&A and the IMB space. In light of IMB M&A activity, we are forecasting mortgage churn of approximately $2 million in the fourth quarter and approximately $10 million for the full year, up from our prior expectation of $8 million. We have been asked what a hypothetical increase in mortgage volumes would equate to in increased mortgage revenues. Noting that we will continue to update our modeling as mortgage volumes increase and we see more history on the actual impact to each individual mortgage customer, we are currently forecasting that a 20% increase in mortgage lending by our customers on volume based pricing, which is about 50% of our US mortgage customers, will yield an approximately 10% increase in revenues from these customers, with the delta taking into account that not all of these customers will exceed their minimums. Professional Services revenues were $18.9 million in the quarter, growing 10% year-over-year. Non-U.S. revenues were $29.6 million, or 21% of total revenues in the third quarter, up 26% year-over-year, or 23% in constant currency. Non-GAAP gross profit for the third quarter of fiscal 2025 was $93.2 million, an increase of 15% year-over-year. Non-GAAP gross margin was 67.2% compared to 66.5% in the third quarter of fiscal 2024. Non-GAAP gross margin continues to benefit from our amended agreement with Salesforce along with product mix. Non-GAAP operating income for the third quarter of fiscal 2025 was $28 million, compared with $20.4 million in the third quarter of fiscal 2024, a 38% increase year-over-year. Our non-GAAP operating margin for the third quarter was 20%, compared with 17% in the third quarter of fiscal 2024. Paired with improved gross margins, we have further expanded operating margins through thoughtful hiring and operating expense management, including with regard to our integration activities for recent acquisitions. We also benefited from approximately $1 million of prior-year payroll tax adjustments in the quarter. Non-GAAP net income attributable to nCino for the third quarter of fiscal 2025 was $24.4 million, or $0.21 per diluted share, compared to $16.2 million, or $0.14 per diluted share in the third quarter of fiscal 2024. Our remaining performance obligation, our RPO, was $1.095 billion as of October 31, 2024, up 19% over $917.1 million as of October 31, 2023, with $730 million in the less than 24 months category, up 16% from $627.6 million as of October 31, 2023. We ended the third quarter with cash and cash equivalents of $258.3 million, including restricted cash, which reflected the refinancing of our revolving credit facility and included $129.7 million that was subsequently utilized to acquire FullCircl on November 5th. During the third quarter, we were paid $10 million on our revolving credit facility and ended the quarter with $166 million of principal outstanding. Net cash provided by operating activities was $5.8 million compared to $5.9 million in the third quarter of fiscal 2024. Capital expenditures were $680,000 in the quarter, resulting in free cash flow of $5.1 million for the third quarter of fiscal 2025. Unbilled accounts receivable increased to $17 million, up from $6.1 million as of October 31, 2023, reflecting an increase in contracts where revenue recognition exceeded billings. Turning now to the changes we have discussed for the past year around our new pricing and monetization strategy, which we are calling the Intelligent Solution framework, I would like to reinforce a couple of points. As a reminder, we are transitioning to platform pricing where the fees we charge for commercial and consumer lending customers will be based on the assets of the financial institution. Specifically, the assets on which fees are based and those being evaluated on an annual basis under these agreements will be those relevant to the lines of business being supported by nCino software. Assets tied to business units not using nCino will not be relevant to fee calculations. We expect these changes will be immediately beneficial to the subscription revenues we recognize from customers under these agreements. We have already seen these changes to our monetization strategy simplify discussions with customers and prospects and we expect they will result in more value creation for nCino. As Pierre noted the credit union that selected us in the third quarter for commercial lending, small business lending, portfolio analytics, and banking advisor did so under the Intelligence Solution Framework, as did the top 40 bank in the U.S. we signed early in the fourth quarter. We expect all new customer and contract renewal discussions beginning February 1st to be under this new framework, including in our commercial lending business. As a reminder, mortgage revenues under the Intelligent Solution Framework are generated from a minimum monthly loan volume commitment with revenue upside as those minimums are exceeded. Turning to guidance. For the fourth quarter, we expect total revenues of $139.5 million to $141.5 million, with subscription revenues of approximately $122.5 million to $124.5 million. For full fiscal year 2025, we now expect total revenues of $539 million to $541 million, with subscription revenues of $467 million to $469 million. This guidance takes into account lower expectations for mortgage revenues in the fourth quarter in light of continued elevated mortgage rates. We expect FullCircl to contribute approximately $4 million to both subscription and total revenues in the fourth quarter. Implementation efforts for FullCircl products are de minimis, so consequently, there generally are no professional services revenues. Non-GAAP operating income in the fourth quarter is expected to be approximately $23.25 million to $24.25 million, and non-GAAP net income attributable to nCino per share to be $0.18 to $0.19. This is based upon a weighted average of approximately 118 million diluted shares outstanding. In light of the significant outperformance in the third quarter, we are increasing our non-GAAP operating income outlook and now expect non-GAAP operating income for fiscal 2025 to be $95 million to $96 million. For full fiscal year 2025, non-GAAP net income attributable to nCino per share is expected to be $0.75 to $0.76 based upon a weighted average of approximately 117 million diluted shares outstanding. Finally, as we have discussed over the past year, we have been providing quite a few new and different financial metrics and have been actively engaging with our shareholder base to solicit feedback on the KPIs and disclosures that are most helpful to the investment community and better understanding and modeling the business. We believe these different metrics would be helpful in providing additional transparency into the business while we navigated market headwinds from the unprecedented rise in interest rates to the liquidity crisis. We would like to thank everyone for the feedback that has been provided including those that participated in interviews with our outside investor relations firm over the past quarter. In response to this feedback, we plan to provide an updated go-forward KPI framework starting with our fourth quarter's earnings report. With that, we'll open the line for questions.

Thank you so much. [Operator Instructions] Our first question is from the line of Michael Infante with Morgan Stanley. Please proceed.

Hi, guys. Thanks for taking our question. Greg, I just wanted to circle back to the fourth quarter outlook. I appreciate the commentary on FullCircl's contribution in 4Q. But could you just help us sort of decompose if you sort of back out FullCircl contribution sort of what the building blocks are to the fiscal 4Q guidance reduction on an organic subscription basis? I heard you on the $2 million of mortgage churn, but I just wanted to figure out the residual. Thanks.

Yes. Thanks, Michael. Yes, those are really the two big puts and takes in terms of the change in Q4 guidance. You mentioned FullCircl, in terms of the organic piece, it would really be a reflection of that increased churn that we commented on as well as, again, as we look at the MBA forecast and volumes for mortgages, notwithstanding the fact that the Fed's fund rate was reduced, we haven't seen mortgage rates come down. And so we wanted to take that into account. You can recall throughout the year, we were looking towards Q4 as a potential increase in mortgage volumes. We kind of timed the Fed's fund rate change right and the lowering of interest rates. But again, without the corresponding lowering of mortgage rates, we are trying to be prudent and cautious as we think about what the impact is going to be in the fourth quarter.

Okay. Understood. So as I think about fiscal 4Q and the exit rate and sort of extrapolating that into next year, FullCircl $4 million. Is it appropriate to annualize that into next year? And as we look at the implied organic subscription numbers in fiscal 4Q, again, is that a relatively reasonable run rate to assume for next year? Thanks.

Yes. I think, Michael, we're going to stay away from guidance for next year, and we'll wait until our Q4 call for that before talking more about next year's performance.

Thanks, Greg.

Thank you. One moment for our next question, and it comes from the line of Adam Hotchkiss with Goldman Sachs. Please proceed.

Great. Thanks so much for taking the question. Greg, just a follow-up on the Q4 commentary. Curious how you think about how the other pieces of the business performed outside of mortgage, and so far what you're seeing in Q4. I know there's a lot of larger deals that typically close into December and January. So any early indicators on how that pipeline is shaping up and how if at all, affected the guidance change?

Yes. No, I think, again, from the last time we spoke, you would have seen us sign and we talked about it, deals internationally, right? We talked about the deals in the Nordics. We talked about the Luxembourg deal. We talked about the largest deal we've had in Japan. So it was really nice to get those off the board. And then in Q4, shortly after third quarter ended, we signed that large enterprise deal in the U.S., something we're excited about, obviously, we've been working on for quite some time. And as you think about that deal, that really was the largest remaining deal we had for this year as we think about some of those larger opportunities. And so the fact that we've got that signed already, certainly, I think, bodes well. And so as we look at the pipe for the rest of the year and what we're expected to execute on, let's say, much more singles and doubles, Adam, versus having to hit that home run. And so we've got a lot of volume we need to go through. But yes, I think as we see where we are versus the last time we spoke, some of those large logos that we referenced, it's nice to see those signed and that's focused on implementing them versus signing them.

Great. Okay. That's really helpful. And then, Pierre, just on the Intelligence solution framework, I appreciate the commentary on the top 40 institution that went on to the new pricing model. Just curious how that process went versus your expectations? And anything you'd highlight that either from a pushback perspective or from a worked-well perspective, anything you'd highlight for folks as we get to the point where you're putting all the renewals on the new pricing model, appreciate it.

Yes, we're actually getting very positive feedback on it. Realize because now for the first time, we're aligning with the bank's success. It's a simplified structure we're not nickel-ing and dime-ing them about seats and little add-ons all the time. So, so far, it's very early in the race. But so far, we're seeing very good feedback from the customers. The value is tied to the loan portfolio. So we grow with the customers, which is good. And simplifying the buying experience is very good. So the old renewal process was easier and simpler. And so we're seeing all the right behavior what we expected so far, putting that in place. So I'm very pleased with that.

Okay. Thank you very much.

Thanks, Adam. Thanks.

Thank you. Our next question comes from the line of Terry Tillman with Truist Securities. Please proceed.

Great. Thanks for taking the questions. This is Bobby Dee, on for Terry. My first one is for Pierre. Pierre, we picked up some commentary or speculation that you may be retiring sometime soon. Is there any perspective you can share on some of that commentary in the market? And then I had one follow-up. Thank you.

Yes. I'm battling a cold, so I didn't realize I sound that old, and that's how people took it. Look, we and the Board take our governance responsibility and obligation very serious, including every succession planning process and the plan for me. There will come a day where obviously somebody will step up into my role. I told the Board that my commitment is to make sure when we find the right person, that will be a smooth transition, whatever period that takes to get it done. Our focus is more on finding the right person, versus specific time line. I love what I'm doing. I enjoy this company, very proud what we built here but we have to find the right person to really take this thing on and accelerate what we built here, and I'm excited about that.

Appreciate that. And then just any updates or customer feedback to share from the initial cohort of Banking Advisor customers, including the one customer that went live in 2Q? And are you all able to share how many customers went live in 3Q? Thank you.

I think we said we added 11 again this quarter. It's early days. People are literally adopting this. It's such a new technology and so on and realize we provide a deep banking experience I'll tell you what's exciting to me about it is, we had a skill-a-thon in the company here where I just unleashed everybody in support, everybody in technology, you could be from sales what ideas we have for skills to put in Banking Advisor because initially, we had 4 of these skills that we came up with and both into the product. And what I've seen now is we've got identified skills we can add to the product over the next 6 to 8 months of -- went from 4 to 48, which is tremendous. So can you imagine if you start putting all of these skills in place, people can just click and the machine is start doing it for them versus manual tasks, so I'm very excited, obviously, to prioritize this and get it rolled out and implement it. But this is going to be a fairly quick transition into this whole intelligent platform. We don't have too much yet from customers going live because they're very careful and cautious how they do this. I want to remind you guys, we are in a regulated industry. And in these industries, you have to certify that what's called a model actually reflect accuracy as well as traceable and auditable. And as such, the initial getting into the water is very slow. But once it takes offer, we can just upgrade them and get them from one skill to 10 skills to 40, that will literally be an upgrade as we roll out upgrades and updates. So I think at our next conference in May, we're going to start showcasing all of these skills and the productivity improvements, and that's going to be quite exciting. And we'll keep you up-to-date as we get feedback from customers because this is top of mind for all of us.

Thank you.

Thank you. One moment for our next question, and it comes from the line of Brent Bracelin with Piper Sandler. Please proceed.

Thank you. Good afternoon. Pierre, I wanted to ask about cross-sell. You clearly have a large installed base of commercial banking customers. You're layering on additional product capabilities, expand the TAM with DocFox, FullCircl, you've got Banking Advisor. When do these products get fully integrated? And your best guess on the timing when you start to see material cross sell? Do you think it's another six months, another year? Are these materializes or large customers? Just trying to think through cross-sell and timing as you layer in these new products when it could have an impact?

Yes. So there's two elements here. The first one I want to comment about the acquisitions separate from homegrown products, okay? And then the second thing is just the sales or booking patterns I'm seeing. I would remind you that every quarter we comment on -- is it mostly commercial, mostly noncommercial, okay? Last quarter, again, more than 50% of bookings came from noncommercial products. So to me, the cross-sell and the platform play is already proving itself has been happening for the past few quarters. So I'm very pleased with that. The second thing is when you do these acquisitions, we let the new company that's now becoming nCino continue with their current pipelines and keep on selling independently, but then we start laying out the vision of the integrated product. And then typically, what happens is the moment you get that out in the market, the direct sales starts slowing down because people say, wait a minute, why would I keep on this way? If I can get a fully integrated product, which is a single platform experience, et cetera. And so what we're seeing is you get your initial bunch of sales, that kind of slows down a little bit. We integrate the products, we launch them as an integrated solution and then sales take off really fast, okay? And that's the patterns I'm seeing with these acquisitions. They are tremendously accretive. I can tell you the excitement I'm seeing around the onboarding solution of the added capabilities both on the DocFox or the front-end experience, and now FullCircl with the data experience coming in there. I believe these solutions as we showcase them, at our next insight, people will start seeing the value and the excitement is building. The feedback I'm getting from customers as we showcase it, because we do early tests and test marketing with clients, is very positive. And I stand by my earlier comments that I believe commercial onboarding is going to be very close to as large for this company as what commercial loan origination was.

Very helpful color there. Greg, I would love to double click in the mortgage, kind of going in here you earmarked maybe $8 million to churn, even with rates going lower, you're seeing more churn, I think another $2 million here in Q4, $10 million for the year. When do you think the mortgage churn kind of pauses? Is the worst behind you? Is it still TBD? What's your visibility into churn beyond Q4 as you think about headwinds to that market, it feels like we should be at a point where churn should be behind you, but that clearly is not the case.

Yes. Brent, I think what we've seen, and this is consistent with comments, I think, last quarter on the call as well is the churn has turned from -- if you look back the last, call it, two years, it was, I think, much more heavily weighted towards mortgage lenders shutting down or going out of business. I think we've seen that largely stabilize, right? It doesn't mean there's not going to be one that pops up. But again, I think we've seen that settle down as mortgage lenders have turned from being unprofitable for each loan they were doing to now being able to start to make money. So I think overall, that's positive. And then it puts you into again, which I think is frankly a sign of maybe a more stable or a healthier market is where you see some M&A. And that's hard to predict. Obviously, we've tried hard and we've talked about it many times, aligning ourselves with some of these large mortgage lenders out there. And so as M&A happens, we certainly hope to be the beneficiary of that. But we know it's not always the case. And I think in this circumstance, again, it was just an IMB being acquired. It's hard to speculate about when that may happen, but there's an impact. But again, I think overall, that bodes well for an improving market versus the churn that we saw previously, which was much more around unprofitability and folks shutting down.

Got it. Mark sense. Thank you.

Thank you. Our next question comes from the line of Saket Kalia with Barclays. Please proceed.

Hey, guys. How are you doing? Thanks for taking my questions here.

Hi, Saket.

Hey, Greg. Hey, Pierre. Pierre, maybe just to start with you. I think from the customer examples that you threw out in the call, it sounds like just the U.S. activity is doing a lot better than expected. My question is maybe more on the international side. Can you just touch on maybe how much of the performance internationally is kind of coming from just the different macro environments out there versus other factors, right, like market maturity or anything else. Does that make sense?

Yes. So look, if you look at the map internationally, we've got a great U.K. island business. We struggled to penetrate the continent. That's why we hired Joaquín, he lives in Madrid, Spain is one of our target areas, I've got Santander, both in the U.K. as well as the U.S. And to me, there's no reason why we shouldn't penetrate those very large Spanish banks that also then carries you into Latin America. So that is a positive highlight for us for the future. but we've not been successful there. In the Nordics, you saw the announcement there. This focused territory approach that we're taking now, we see some results coming from it. Japan, I was in Japan, excited about Japan. Culturally, I don't speak the language, so you get there, you get the translators and you listen to everything, I've never seen a group of Japanese people that excited in my life, but I haven't been that much exposed, but I'm just telling you it is very positive. It was the largest banking conference in Japan for the year. We had great attendance people on stage spoke very positively about the company. And then you go down to Asia Pac, Australia and New

Got it. Very helpful. Greg, maybe for my follow-up for you. I know RPO was never a metric that you manage the business to or that you really focus us on, but the growth there accelerating, and I know that, that can really depend on mix of business and, of course, duration. But just to make sure the question is asked. Can you just speak to some of that RPO strength this quarter?

Saket, I think it really was just executing. I think it was a nice mix of net new business as well as renewals. Nothing unusual to call out from that perspective. And so I think it was just good execution from the team. And to your point, you said when you asked Pierre the question, we've talked about mortgage from a U.S. perspective, but hopefully, that comment in terms of both our community and regional and enterprise businesses, having another good quarter, both of them as well as being well under way to exceeding their targets for the year, something, again, you can take from that as it relates to that RPO number.

Very helpful. Thanks guys.

Thanks, Saket.

Thank you. One moment for our next question, and it comes from the line of Alex Sklar with Raymond James.

Thank you. Greg, maybe just following up on your answer right there to Saket's question. The commentary on the strong gross bookings and on your way to exceed the targets for the year. You did call out, to offset those is the higher IMD churn. So how should we think about that net 50% bookings target? Is that still in play given those two factors of the higher gross bookings, but to slightly higher gross -- lower gross retention. I'm curious how those to kind of offset. Thanks.

Yes. Thanks, Alex. Look, that remains our target. But as you all know, the fourth quarter has historically been our largest bookings quarter of the year. So we'll hold off commenting on that at this time, but we're certainly focused on executing towards that target.

Okay. Great. And then maybe one for each of you on FullCircl. But Pierre, just some more color on what you saw in first FullCircl, why now? And then Greg how much of that $4 million hitting subscription revenue? And any color on kind of the growth rate this year of the FullCircl business? Thanks.

Yes. So as I explained earlier, DocFox acquisition was all about the interaction between the banker, the client and the onboarding processes. So think of the workflow, think of the tools they have on their desktops in their browsers and on their phones to actually facilitate a complex process of exchanging documents and information. That's why we got DocFox as a front end similar to what SimpleNexus was on the consumer or individual side. But then if you look at ongoing client health management, so look at Europe, if a company has a Board of Directors and all of a sudden, they swap one out, somebody from, let's say, the Middle East, that's on a terrorist watch list. How does the bank find that out? How would they know? And that's by compliance rules, they have to know that at all times. FullCircl has integrations and data that continuously monitoring the health for the legality of the client makeup to make sure you keep that customer legally or do you warn them that you cannot do business with them because of that. Just like portfolio management from a credit quality perspective, these are tremendously manual and labor-intensive processes. And so putting this into an end-to-end experience where the customers can get monitored automatically through integrations and data, and we can do early warnings and actually prevent them from getting in trouble regulators, in Europe specifically, this played very strong because of the multinational nature of so many companies there. And that's what excited me. So we are building this onboarding experience second to none. And I believe, again, we can take it to all our commercial customers and cross-sell there.

And Alex, on the follow-up question, we commented $4 million in Q4 and that's all subscription revenue. There's generally no professional services with -- associated with that product and that implementation.

Okay. Great. Thanks for that. And just real quick, Greg, any color on what that was growing this year just as we try and think about for next year?

No, we haven't commented on that. Obviously, we'll factor that in as we come out with our Q4 call and give guidance for next year. As Pierre talked about, we want to focus on getting that integrated. Again, we have a history with them in terms of partnering. And so that, I think, always helps. But ultimately, we'll focus on getting that business integrated and getting our go-to-market motion together. And again, as we come back and talk to you guys on the next call, I think we'll have additional color around how that's going to contribute to our growth next year and beyond.

Alright. Thank you, both.

Thank you. Our next question comes from the line of Koji Ikeda with Bank of America. Please proceed.

Hey, guys. Thanks so much for taking the questions. A couple from me here. I wanted to ask on the mortgage volumes. And you gave some excellent color in the prepared remarks, thinking about volume increases and what it would contribute in revenues based on those volume increases. But you said something interesting about customers exceeding contract minimums. And so the minimums. And so the question here is, at what level of volume increase would it be required to get all the customers above minimum commitment levels?

Very specific question, which we appreciate, it's something we'd follow back up with you on it. It does differ. As we've talked about, we went to this model change in a very challenging time for that market. And so we -- again, I think we're pleased when we would get some of those customers to commit to any minimums. And our belief has been that minimums for the most part, were set generally low right, in terms of what they were comfortable signing up for. I think the challenge that we've had is, again, there's been a lot of talk about mortgage volume increases. And we've been telling folks, it's really important for us to see volumes go through each one of those customers because the minimums are going to be at different levels. And as volume comes back, again, it may come back at different levels for different lenders, right? So maybe more aggressive, some may have gone out and try to accumulate a whole bunch of loan officers in terms of expanding their footprint. And so we really want to see that track record and that history of that data go through before I think we can give more clarity. But we try to give some indication for you guys from a modeling perspective with what we see. And as I noted, the more data we get. And once we actually see, I think volumes meaningfully increase, we'll be able to come back with, I think, more specificity, so you guys can continue to tweak your models and be as accurate as possible.

Got it. Thanks, Greg. I really appreciate that. And maybe a follow-up here, more philosophical for Pierre or Greg. As you head into next year, fiscal 2026, what's -- what do you think is the bigger driver for your customers to increase spend with nCino? Is it quite simply lower interest rates? Or is it more a resilient economy that would really drive more spend from your customers?

That's an interesting question. What I'm seeing, and I've been with a number of CEOs, yes, literally in the past months is that as you go through these administrations, and we started the company in late 2011 with Obama administration in place. And then, of course, Trump came in, then Biden, et cetera. What you see as you go from a defensive posture with regulators and compliance to more of an upbeat go-go-go activity -- economic activity if you go through these cycles. And what I'm seeing again is there's an optimistic outlook on the economy as a whole. There's an excitement about M&A. We typically are on the winning side of M&A because the people who bought nCino are the more forward-looking, but it does introduce a little bit of risk because if the non-nCino Bank buys nCino Bank, we've had successes where we actually take them up into the acquirer, but we've also had -- it's a minority, but we have cases where we lose the account, okay? So I would tell you, they are excited about our ability to bring -- on the macro level, that there's going to be M&A, there will be an increased economic activity, which I think is good for all of us. They believe the rates will still keep on coming down until it's at a neutral level. So all of those things is positive for the banks. On top of that, the continuous innovation we do in a single platform is playing out all over the place. As I mentioned earlier on my bookings, more than 50% is noncommercial. So all of that combined makes me optimistic that we will continue on this pattern and of course, AI. That's going to be a major game changer for us, along with this new pricing model. So if you package all of that together, I feel pretty positive.

And just one more thing to add is as you talk about AI, obviously, a focus everywhere. Again, Banking Advisor, really excited about another 11 deals being signed. And as was mentioned, coming Feb 1, every deal that we do is going to have Banking Advisor in it and seeded. We've talked in the past about the data and how, again, we've been fortunate and focused on accumulating data, both commercial lending data, mortgage data as well as consumer lending data. But what we've also been very focused on is getting consents from our customer to use that data. And I think that puts us in a unique position. And as we sit here today, we've got, I think, four of our 10 largest customers that we've received their consents. And you can appreciate those larger customers being some of the largest banks in the country. And so I think that bodes well as we talk about AI and we talk about Banking Advisor and we think about next year and beyond, get us in a pretty unique position with what we've been able to create and leverage the platform to do.

Thanks, guys. Thanks for taking the questions.

Thank you.

Thank you. Our next question comes from the line of Ryan Tomasello with KBW. Please proceed.

Thanks for taking the questions. Greg, just wanted to double-click again on the 4Q guidance, just the back of the envelope math stripping out FullCircl and also looking at this organically removing DocFox. I think the rough math implies that you'll be exiting the year somewhere with an organic subscription growth rate in like the high single to low double digits. I guess does that math sound right to you? And how should we think about that exit run rate in the context of your confidence in the 15% subscription revenue growth target that you've called out for next year? Which I assume was an organic target.

Yes. So as it relates to that, Ryan, that 15% remains our target. But just as I said with the net bookings commentary, the fourth quarter is obviously our largest bookings quarter historically. And so we'll refresh our guide and outlook for next year on our Q4 call. And so we would note that as we talk about the breakdown of growth, I don't want to do kind of a quick back of the envelope to reconcile what you said. And so from that perspective, I'd say I follow up with you. But as we talk about M&A, M&A is something that we will continue to evaluate as we look to continue to expand our SAM in our product offerings, just as we always look at buy versus build versus partner. And so from our perspective, M&A is part of our corporate strategy. We feel really good about the deals that we've done. And as we think about year-over-year comps, keep in mind, as you noted, we do have M&A in this year as we think about what FullCircl will bring ultimately next year as well in comps. But as it relates to your single kind of breakdown, let me confirm that and close off to make sure I give you an accurate answer.

Okay. Thanks. And then, Pierre, just a follow-up question for you. I think one of the dynamics that wasn't called out maybe as much in your remarks was this optimism around deregulation and this sigh of relief that banks are breathing with the new administration. I guess has that dynamic come into conversations at all with customers. And is this something that you see is helping to unlock demand appetite for larger-scale tech deployments just as banks are presumably a little less distracted if this deregulatory theme really comes into play. Thanks.

I think there's a sense -- and by the way, the new administration is very vocal about deregulation and removing government barriers. I am not a bank regulator that could tell you exactly what the answer is what they should do. But I can just tell you from the sentiment I'm hearing from bankers is that there is a positive outlook for the future, both on regulation applying to the right level of bank. The smaller banks especially struggle with an overburdened regulated environment, okay? I can tell you I've been in at conferences where I listened to CEOs of the Big 4. And if they start explaining to you the number of people they've got answering to regulators and trying to be perfect and never make a mistake. It really sound cumbersome for those companies. And I think you've seen people like Jamie Dimon to make public statements about it. So there is a sigh of relief that they may become a better level of regulation into banking as they go forward. And that typical optimism drives people to start looking at other things. I will also remind you that before this election, we had this liquidity crisis which weighed on the banks, and they were worried about survival. Now you get this little positive push and now people start looking much more strategically at their businesses. Then you throw M&A into the mix. And all of a sudden, they go, any possibility is possible in front of them. They can buy banks, they can sell the bank, they can drive up loan volumes, regulation will be easier for them, and that drives economic activity. So I think that overall positive and optimistic posture is boding well for us.

Great. Appreciate the color.

Thank you. Our next question comes from the line of Chris Kennedy with William Blair. Please proceed.

Good afternoon. Thanks for all the detail. Thanks for taking the question. Greg, can you just give us an update on the fiscal 2025 expectation for revenue churn? I think it was 5% previously. What's your current expectation?

Yes, we still are around that 5% mark, Cris. It was at 20.5%. We talked about raising it through Q3 churn by the $2 million for mortgage. It's still in around about 5%. So last year, 9%, again, trending the right way. So that's where we are.

Okay. Thank you for that. And then you also alluded to providing additional KPIs. Is there any kind of preview you can give? Is that ACV? Is it business mix? What more are you thinking about disclosing going forward? Thank you.

Thanks, Cris. And again, appreciate all the discussions we've had really over the past year in terms of what's most helpful. But ultimately, we'll lock down that framework and communicate it formally on our Q4 call. Obviously, with the feedback we've gotten, we've got kind of a working plan internally. But we'll wait to just start the new year fresh with those KPIs and go forward from there.

Great. Thank you.

Thank you. One moment for our next question, and it's from the line of Nick Altmann with Scotiabank. Please proceed.

Awesome. Thank you. Pierre, you talked about earlier how Banking Advisor is going to be part of every net new deal as well as renewal in I guess on the positive side, perhaps there's going to be some ACV uplift there. So can you maybe just touch on that aspect of it. On the flip side of the equation, you're bringing in a generative AI product into some of these deals. Those deals might take longer, they might have to go through a more lengthy approval process. So maybe just talk about the puts and takes there and whether we might see some sales cycle elongation, albeit with the benefit of an ACV uplift? Thanks.

Yes. So let me talk about renewals first, and then we'll go to net new sales. Renewals, so that's where you learn how these things go and who's pushing back, et cetera, because the renewals is a mix of big customers, large customers, small customers, medium customers, and they've known us and we've got a reputation. So far with renewals, I've not seen Banking Advisor upholding any of it. As a matter of fact, they welcome the fact that they can get it and get access to this. We are a trusted vendor with a long history of supplying critical software to these banks. And to date, I have not seen any pushback on that. I'll also comment to you that we do see an ACV uplift because of Banking Advisor as well as an uplift because of the new pricing structure. So we do expect on a continual basis to get increased subscription revenues because of the new pricing structure as well as the inclusion of Banking Advisor, that bodes well for us. When it comes to new deals, the Banking Advisor is so integrated into the solution. It literally just become a differentiator and people start realizing that how do you work without this. It's like me giving you a flip phone and start saying, live with that for a week, and you cannot Google anybody. You cannot search anything. You cannot use your airline apps on your phone, et cetera. At the moment people see the possibilities of how the system is going to work in the future, it becomes a massive plus. Because again, remember, every time we launch a skill like that, we actually prove to them it's certified, it's auditable, it's traceable and explainable, which is what regulators will come after. So I feel very good that we've got the positioning and the brand to actually get this out without it being an obstacle. I've not seen elongated sales cycles because of that.

Got it. Okay. And then, Greg, just circling back to the implied organic Q4 guidance. Any change to your guidance philosophy as we look at that growth rate exiting the year? Thanks.

Thanks for the question. And just after scribbling here, it would be low double digits in Q4 from a growth rate perspective. If you exclude the M&A that we did this fiscal year, so to confirm that. But from a guidance perspective, no different. Look, we've beaten the top line every quarter and the bottom line. We've raised the bottom line. We've been, I'd say, cautious or prudent on the top line. Again, not wanting to get too ahead of ourselves, particularly with some of the volatility in mortgage. And I think that's played out as we sit here in Q4, and again, there was an interest rate reduction, but really not a mortgage rate one. So I think that's consistent and has played out prudently as we think about guidance. But from an overall guidance perspective, there's no change in terms of how we've approached this year.

Great. Thank you.

Thank you. [Operator Instructions] Our next question is from Aaron Kimson with Citizens JMP. Please proceed.

Hey, thanks for the questions. I have two on digital account opening, given the focus there. First, is your deposit account opening, excuse me. Is your deposit account opening product is something you see mostly credit unions and community banks implementing today? Or are you seeing success selling that product as is into enterprise banks as well?

It goes across the spectrum. It typically is part of a platform sale. We don't run around trying to sell stand-alone by itself, our value proposition is the full platform end-to-end experience and how it works across the bank. And by the way, just a reminder, it is both in brands as well as a self-service tool, which differentiate us. Many of the people talk about digital account opening. And it's actually more of an add-on to an existing old middle back office system, but we do see success across the spectrum.

Got it. And I think you kind of answered my second question just around the strategic importance of owning that deposit account opening relationship, right? I mean the uplift you see there and owning that real estate, but it sounds like you're attaching that. You're -- it's in all your lands. So I think you answered my question.

Yes. I always view it as, look, with 0 interest rates, deposits were free and people are like, well, why would you do this? And then the world change and all of a sudden the deposit was important again, okay? I would tell you, in the end, the only benefit banks have in the marketplace is that they have cheaper deposits. Otherwise, you can get money from private equity in other places, okay? And they've got a presence in the branch network. But in the end, banks compete with the other, and they have to be good raising deposits. And I believe that we've got a solution that will be an integrated solution that feels the same experience across all channels. And so the bank can optimize their workplace, their workforce as well as their customers have a nice, easy, simple experience across all platforms.

Aaron, does that answer your question?

Yes. All good. Thanks.

Thank you so much. One moment for our last question, and it comes from the line of Charles Nabhan with Stephens. Please proceed.

Hi, guys. Thanks for getting me in. And I apologize if I missed this, but -- you had mentioned that the home-builder deal fell into 3Q. Could you quantify the impact that may have had on the quarter and specify whether -- how much is in professional services versus subscription?

Thanks for the question. I don't think we're going to break down a particular customer and their impact. I think the main point there was a couple of things. One, ultimately, again, good execution in terms of the implementation and us finishing that up ahead of where we were forecasting it. I think that's the main thing and ultimately, again, getting them live, as volumes do pick up, again, having such a large customer leveraging nCino should ultimately help us again as we expand market share and hopefully and get increased revenue from increased volume.

Got it. And as a follow-up, I had somewhat of a philosophical question. In the past, you've talked about M&A as a catalyst to demand in that acquiring banks tend to get their house in order from a middle back office standpoint before they go out and do deals. And I know it's early given the timing of the administration change. But I wanted to see if that's something you envision occurring, whether you're already having conversations around -- centered around that concept or type of activity.

Yes. That is a normal talk track for us to explain to banks that if you want to be an acquiring bank, you better have your middle back office in place, get all your channels in place because when you bring that bank on, what is your operating methodology? What is your standard operating procedures, okay? Otherwise, with a bunch of point solutions, you have to train them on all your systems, it's disparate, et cetera. And that's why we've seen in the past, banks actually got bought because they had nCino and then it got taken up into the bigger bank we acquired as well. So it's been a catalyst for acquisitions. I believe that pattern will play out again as we go into next year. And I'm very optimistic that it could be positive for us.

Great. Appreciate all the color. Thank you.

And this concludes our Q&A session. I will turn it back to Pierre Naude for closing comments.

Thank you, operator, and thank you, everyone, for joining us today. We appreciate your analysis, your insights and your feedback, and we're looking forward to talking to you next quarter. Thank you so much.