nCino (NCNO) Q3 2026: Platform Pricing Hits 27% of ACV as AI Adoption Accelerates Expansion
nCino’s third quarter showcased broad-based execution, with platform pricing conversion and AI-driven product adoption fueling both margin expansion and early renewals. The company’s balanced growth across geographies, business lines, and product innovation—especially in AI—positions it for continued outperformance into fiscal 2027. Management’s raised guidance and conviction in its ACV trajectory signal growing confidence in the durability of demand and operational leverage.
Summary
- AI Traction Drives Early Renewals: Demand for AI-powered features is prompting customers to renew contracts ahead of schedule.
- Platform Pricing Uplift Expands: 27% of annual contract value (ACV) now on the new pricing model, supporting revenue quality.
- International and Product Breadth Fuel Pipeline: EMEA and Japan, alongside core lending and onboarding, are accelerating bookings momentum.
Performance Analysis
nCino delivered double-digit revenue growth in Q3, with subscription revenues up 11% year-over-year and total revenues rising 10%. The company’s performance was driven by both execution-based overperformance and strong results in its U.S. mortgage segment, which outpaced expectations despite a tough prior-year comparison. Notably, non-U.S. revenues grew faster than the company average, up 13% as reported, with international subscription revenues up 21%.
Operating leverage was a standout, as non-GAAP operating income margin expanded by 600 basis points year-over-year and quarter-over-quarter. Efficiency gains were attributed to AI-driven productivity, disciplined cost management, and benefits from the May restructuring. Share repurchases completed the $100 million authorization, reflecting confidence in capital allocation flexibility. The company’s balanced portfolio—across commercial, consumer, and mortgage lines, and spanning global markets—helped mitigate churn and diversify growth sources.
- AI-Enabled Margin Expansion: AI tooling and automation initiatives are directly contributing to improved cost structure and faster execution.
- Balanced Revenue Sources: No single segment or geography dominated growth, reducing risk and enhancing revenue stability.
- Early Renewals and Pricing Transition: Customers are opting into platform pricing early, often to access new AI features, which is driving uplift and future-proofing revenue streams.
Management’s guidance philosophy remains conservative, not extrapolating one-time outperformance, but the underlying trajectory is clearly upward, with a visible path to Rule of 40 profitability by late fiscal 2027.
Executive Commentary
"The traction we are seeing in the business has further increased my conviction in not only achieving our sales and financial goals for fiscal 26, but also in the journey ahead for Encino. The successful outcomes our customers are seeing continue to reinforce that Encino's platform and strategy are resonating more than ever in an end market that is seeking significantly greater operational efficiency paired with providing exceptional user experiences and continuous product innovation."
Sean Desmond, Chief Executive Officer
"We continue to see opportunities in the business for further efficiency. And yes, we're seeing it from AI, as well as, again, I think just very healthy cost discipline across the organization. ... The team's done a very good job focusing on becoming more efficient. And I think one of the things that we've learned, you know, post the difficult May restructuring is, you know, operating leaner, you can actually operate more efficiently and quicker."
Greg Ornstein, Chief Financial Officer
Strategic Positioning
1. Platform Pricing and Revenue Quality
nCino’s shift to platform pricing—now at 27% of ACV—represents a structural improvement in revenue durability and pricing power. This transition is being accelerated by customer demand for immediate access to new AI-driven features, especially among early renewals. Management cited a consistent 10% uplift target on like-for-like conversions, and Q4 is expected to be the largest cohort, amplifying the impact into fiscal 2027.
2. AI as a Differentiator and Adoption Catalyst
The company’s AI strategy is rapidly moving from feature launch to embedded, outcome-driven adoption. Over 110 customers have purchased banking advisor intelligence units, with both large and small institutions deploying AI tools for risk monitoring, credit analysis, and operational efficiency. Management’s focus is on driving adoption, not just bookings, with a roadmap to 100 discrete AI capabilities by year-end—up from 18 in May. The “halo effect” of being perceived as the leading AI partner in banking is translating into new wins and early renewals.
3. International Acceleration and Segment Breadth
International markets, particularly EMEA and Japan, are outpacing company growth, with focused leadership and solution expansion driving pipeline conversion. Recent wins in Japan and the Czech Republic, along with a first deal in Spain, highlight the company’s ability to localize and scale. The balanced growth across commercial, consumer, and mortgage lending, as well as onboarding, ensures no single segment dominates, reducing cyclicality and expanding total addressable market.
4. Operational Excellence and Cost Discipline
AI-driven automation and process improvements, especially in professional services, are driving gross margin expansion. Initiatives like Project SevZero are enabling more prescriptive, efficient deployments, with management targeting better services margins in the second half of next year. The May restructuring has instilled a leaner, faster operating culture, with ongoing savings reinvested to preserve flexibility as the technology landscape evolves.
5. Customer Expansion and M&A Tailwinds
Bank M&A remains a net positive, with nCino being chosen as the go-forward platform in 95% of tracked events over the past decade. Expansion within existing enterprise customers, including two top 15 U.S. banks, underscores significant white space in the installed base. The company’s goal is to make every customer a platform customer, expanding across commercial, consumer, and mortgage lines, and leveraging AI and analytics to drive deeper adoption.
Key Considerations
nCino’s Q3 demonstrates a synchronized advance across product, pricing, and operational levers, with AI adoption and international growth adding new layers of resilience and upside.
Key Considerations:
- AI-Driven Differentiation: Early customer adoption of AI features is catalyzing both bookings and early contract renewals, creating a competitive moat.
- Pricing Power and Revenue Mix: Platform pricing conversion is raising ACV quality and supporting multi-year revenue visibility.
- Balanced Portfolio Mitigates Risk: Growth is diversified across commercial, consumer, mortgage, and onboarding, limiting exposure to any single market cycle.
- Operational Leverage and Margin Expansion: AI-enabled efficiencies and cost discipline are accelerating the path to Rule of 40 profitability.
- International Momentum: EMEA and Japan are now outpacing company growth, with focused investments translating into pipeline wins.
Risks
Key risks include the pace of AI adoption among more conservative banking customers, macroeconomic uncertainty in financial services IT budgets, and the potential for competitive responses from legacy core banking vendors or emerging fintechs. Management’s conservative guidance approach helps manage expectations, but any slowdown in early renewals or delays in platform pricing conversion could temper near-term revenue growth. International sales cycles remain lengthy, and execution risk persists as nCino scales its global go-to-market footprint.
Forward Outlook
For Q4, nCino guided to:
- Total revenues of $146.75 million to $148.25 million
- Subscription revenues of $130.75 million to $132.25 million
For full-year 2026, management raised guidance:
- Total revenues of $591.9 million to $593.4 million
- Subscription revenues of $520.5 million to $522 million
- Non-GAAP operating income of $127.2 million to $128.2 million
Management highlighted several factors that will shape Q4 and beyond:
- Largest cohort of platform pricing renewals and bookings expected in Q4
- Continued focus on driving AI adoption and operational analytics across the customer base
Takeaways
nCino’s Q3 performance reinforces its position as the AI-enabled operating system for modern banking, with platform pricing and global expansion adding durable, high-quality growth levers.
- AI Adoption as a Growth Engine: Early customer wins and rapid expansion of AI capabilities are driving both near-term bookings and long-term stickiness.
- Margin and Revenue Quality Inflection: Platform pricing, cost discipline, and AI-enabled efficiency gains are accelerating operating leverage and improving revenue durability.
- Future Watchpoint: Investors should monitor the pace of international pipeline conversion, continued early renewals, and the scaling of AI agent adoption as key signals for sustained outperformance.
Conclusion
nCino’s Q3 results reflect a company executing on multiple fronts—AI innovation, pricing power, and operational discipline—while building a balanced, global growth engine. The path to Rule of 40 profitability is now visible, with AI adoption and international expansion serving as catalysts for further upside.
Industry Read-Through
nCino’s results underline a structural shift in banking technology procurement, where AI capabilities and unified platforms are now table stakes for competitive differentiation. The early renewal trend and willingness to pay for immediate access to innovation signal that banks are prioritizing modernization and efficiency, even amid budget constraints. Legacy core vendors and fintechs face rising pressure to match the pace of AI-enabled product delivery, while platform-based pricing models could become the norm across vertical SaaS. International markets, especially in Asia and EMEA, are accelerating adoption, suggesting a global race to modernize banking infrastructure is underway.