Q1 2025 nCino Inc Earnings Call

Operator: Good day, and thank you for standing by. Welcome to the Ncino First Quarter Fiscal Year 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode.

Good day and thank you for standing by welcome to the Encino first quarter fiscal year 2025 financial results Conference call. At this time all participants are in a listen only mode. Please be advised that today's conference is being recorded after the speaker's presentation. There will be a question and answer session.

Operator: Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Speaker Change: To ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again I would now like to hand, the conference over to your Speaker today, Harris and Masters director of Investor Relations.

Harrison Masters: I would now like to hand the conference over to your speaker today, Harrison Masters, Director of Investor Relations. Good afternoon, and welcome to Ncino's first 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, 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 statement.

Harrison Masters: 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 gap metrics can be found in today's earnings release, which is available on our website and as an exhibit to the Form 8K 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 now turn the call over to Pierre. Thank you, Harrison.

Speaker Change: Good afternoon, and welcome to <unk> first quarter fiscal 2025 earnings call with me on today's call are <unk> de <unk>, Chairman and Chief Executive Officer, and Greg Ornithine, <unk> Chief Financial Officer during.

Speaker Change: 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.

Speaker Change: Filings and other publicly available documents, the financial services industry and global economic conditions.

Speaker Change: <unk> disclaims any obligation to update or revise any forward looking statements.

Speaker Change: 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.

Speaker Change: As well as the earnings presentation on our Investor Relations website at Investor that Encino Dot com.

Speaker Change: With that I will now turn the call over to Pierre.

Pierre Naude: And thank you all for joining us today. We are very pleased with the start of the year. We built on the sales momentum from Q4, with gross sales in the first quarter exceeding our plan and establishing a company record for gross sales in the first quarter. We saw strength across the business, with existing customers expanding their adoption of our platform, most notably in the U.S. enterprise, community, and regional markets. Last quarter, I noted that we expected net sales for fiscal 25 to increase approximately 50% over last year.

Pierre: Thank you Allison and thank you all for joining US today, we're very pleased with our start to the year. We both on the sales momentum from Q4 with gross sales in the first quarter exceeding our plan and establishing a company record for gross sales in the first quarter.

Pierre: We saw strength across the business with existing customers expanding their adoption of our platform.

Pierre: Notably in the U S enterprise in community and regional markets.

Speaker Change: Last quarter I know.

Speaker Change: Notice that we expected net sales for fiscal 'twenty five to increase approximately 50% over last year.

Pierre Naude: Our strong Q1 performance certainly increases our confidence in achieving that goal. At year end, we pointed to stabilization of interest rates as key to the improving tone of customer conversations and more normalized buying behavior. The December 2023 Federal Reserve Open Market Committee meeting provided stability that was missing in the U.S. market for almost two years.

Our strong Q1 performance certainly increases our confidence in achieving that goal.

Speaker Change: At year end, we appointed the stabilization of interest rates is key to the improving tone of customer conversations and more normalized buying behavior there.

Speaker Change: In December 2023, Federal Reserve open market Committee meeting provided stability that was missing in the U S market for almost two years.

Pierre Naude: With more visibility into their own financial performance, more and more financial institutions have been able to refocus on strategic initiatives to improve their operations, create additional operating efficiencies, provide better user experiences for their clients, and improve their competitive positioning. This is translating to more technology spending. 72% of the executives we polled in an internal survey this month responded that their IT budgets have increased from last year, with 44% citing an increase of over 5%. While at this rate, stability has been a positive for most of our business. Rates being higher for longer have kept the mortgage market under pressure.

Speaker Change: With more visibility into their own financial performance more and more financial institutions have been able to refocus on strategic initiatives.

Speaker Change: To improve their operations create additional operating efficiencies provide better user experiences for their clients and improve their competitive positioning.

Speaker Change: This is translating to more technology spend.

Speaker Change: 72% of the executives report and an internal survey. This month responded that their it budgets have increased from last year was 44%, citing an increase of over 5%.

Speaker Change: While interest rate stability has been a positive for most of our business right.

Speaker Change: Rates being higher for longer have kept the mortgage market under pressure.

Pierre Naude: Despite the difficult market conditions, our U.S. mortgage business continued to perform well, adding 15 new logos and again exceeding internal quarterly gross sales targets, with strength in both the FI and IMB market segments. The difficult mortgage market over the past couple of years has reinforced the imperative for mortgage lenders to leverage technology to improve profitability. We can provide a more enjoyable and efficient customer experience and attract the best talent. Our results again reflect our success in displacing competitors and cross-selling into our banking installed base.

Speaker Change: Despite the difficult market conditions to our U S mortgage business continued to perform well, adding 15, new logos and the gain exceeding internal quarterly gross sales targets with strength in both EFI and <unk> market segments, the difficult mortgage market over the past couple of year.

Speaker Change: As reinforced the imperative for mortgage lenders to leverage technology to improve profitability.

Speaker Change: Provide a more enjoyable and efficient customer experience and attract the best talent our results again reflect our success in displacing competitors.

Speaker Change: And cross selling into our banking installed base. We are currently in a waiting game for the first fed rate cut and the puts and takes of the demand equation do add a level of difficulty in predicting how and when rate cuts will impact mortgage volumes that said, we are confident that the <unk> market.

Pierre Naude: We are currently in a waiting game for the first Fed rate cut, and the puts and takes of the demand equation do add a level of difficulty in predicting how and when rate cuts will impact mortgage volume.

Pierre Naude: That said, we are confident that our market-leading technology and our ongoing commitment to product innovation will continue to yield share gains. Obviously, there are nuances by market, but we see priorities generally aligned across all of the markets we serve. The liquidity crisis a year ago and the ensuing difficult business cycle imparted some lasting lessons for our customers and prospects. Operational efficiency matters, and quality digital experiences are table stakes for their clients.

Speaker Change: <unk> technology, and our ongoing commitment to product innovation will continue to yield share gains.

Speaker Change: Obviously, there are nuances by market, but we see priorities generally aligned across all of the markets. We serve the liquidity crisis, a year ago and the ensuing difficult business cycle in province, some lasting lessons for our customers and prospects operational efficiency matters and quality.

Speaker Change: Digital experiences are table stakes for their clients as.

Pierre Naude: As the only cloud-native single platform that spans lending, onboarding, and account opening operations across business lines within a financial institution, we are uniquely positioned to bring efficiency and a modern digital experience to financial services. This was on full display for over 1600 attendees at Insight, our annual user conference held in Charlotte just two weeks ago. In responding to a registration survey, more than 70% of attendees confirmed that improved efficiency would be the number one priority for their institution in 2024.

Speaker Change: As the only cloud native single platform that spans lending Onboarding and account opening operations across business lines within the financial institution, we are uniquely positioned to bring efficiency and a modern digital experience to financial services.

Speaker Change: This was on full display for over 1600 attendees at insight our annual user conference held in Charlotte just two weeks ago.

Speaker Change: In responding to legislation survey more than 70% of attendees confirmed that improved efficiency was the number one priority for the institution in 2024.

Pierre Naude: This aligns directly with our mission of bringing people, processes, and data together on a single customer-centric platform. As the first steps toward digital transformation can begin anywhere within a financial institution, we've been focused on ensuring that all of our solutions are market-leading.

Speaker Change: This aligns directly with our mission of bringing people processes and data together on a single customer centric platform.

Speaker Change: As the first steps towards digital transformation can begin anywhere between the financial institution.

Speaker Change: We've been focused on ensuring that all of our solutions our market leading <unk>.

Pierre Naude: For example, in the first quarter, an over $15 billion asset bank expanded their use of Ncino from treasury onboarding to include small business and consumer lending, as well as deposit account opening. We expanded ACV by nearly seven times within this account in Q1, even though they are not yet a customer of our flagship commercial lending solution. In April, we announced a number of enhancements to our consumer lending solution, including the omnichannel experience we've discussed for the past few quarters.

Speaker Change: For example, in the first quarter and over $15 billion asset bank expanded their use of Encino from Treasury Onboarding to include small business and consumer lending as well as deposit account opening.

Speaker Change: We expanded ACB by nearly seven times within this account in Q1, even though they are not yet a customer for our flagship commercial lending solution.

Speaker Change: In April we announced a number of announcements to our consumer lending solution <unk>.

Including the Omnichannel experience, we've discussed for the past few quarters.

Pierre Naude: Insight was the GA launch of Omnichannel, and we couldn't be more excited about the incredibly positive reaction and feedback from our customers for this product as we make the same truly mobile-first point-of-sale experience, already an important differentiator for our U.S. mortgage solution, available across all of consumer lending. Rounding out our consumer lending enhancements are new capabilities for indirect auto lending made possible through the recent tuck-in technology process of Allegro, in evaluating both partners by decision to solve for indirect lending. We decided the most efficient way to accelerate development for the specialized vertical was to acquire the technology from a valued partner in the credit union space through the state's financial group.

Speaker Change: Insight was the launch of Omnichannel and we couldnt be more excited about the incredibly positive reaction and feedback from our customers for this product as we make the same truly mobile first point of sale experience already an important differentiator for our U S mortgage solution.

Speaker Change: Available across all of consumer lending.

Yes.

Speaker Change: Rounding out our consumer lending enhancements of new capabilities for indirect auto lending made possible through the recent tuck in technology purchase of Allegra.

Speaker Change: In evaluating the boat.

Speaker Change: <unk> decision to sulfur indirect lending, we decided the most efficient way to accelerate development for the specialized vertical.

Speaker Change: It was to acquire the technology from a valued partner in the credit Union space through States financial group.

Pierre Naude: You'll also recall we discussed the acquisition of Doc Fox on our last earnings call. This acquisition provides us with new onboarding and account opening capabilities for small business and commercial banks. Insight was the first opportunity for many of our customers to see how the solution digitizes and streamlines a traditionally high-touch, inefficient, and time-consuming process. The feedback has been tremendous, including over 100 new sales and leads generated at Insight.

You'll also recall, we discussed the acquisition of dock folks on our last earnings call. This acquisition provides us with new Onboarding and account opening capabilities for small business and commercial banking.

Insight was the first opportunity for many of our customers to see how the solution Digitizes and streamlines, a traditionally high touch inefficient and time consuming process.

Speaker Change: The feedback has been tremendous including over 100, new sales and leads generated at insight.

Pierre Naude: We continue working with early adopters on an integrated product initially targeted at the community and regional banking market in the U.S. One mutual customer has reported onboarding time for business accounts being cut from two weeks to under an hour with DocFox. In our early testing of the market, we have found solving the commercial onboarding platform for FIs can yield around half of the ACV we expect for commercial lenders. We are incredibly excited about the opportunity for DocFox, which will be referred to as the Ncino Commercial Onboarding and Account Opening Solution, and look forward to expanding this offering for U.S. enterprise customers later this year.

Speaker Change: We continue working with early adopters on an integrated product initially targeted at the community and regional banking market in the U S.

Speaker Change: One mutual customers are supported Onboarding time purposes accounts being cut from two weeks to under an hour with Dr trucks.

Speaker Change: The testing of the market, we have found solving the commercial onboarding platform for FY <unk> can yield around half of the HCV, we expect for commercial lending.

Speaker Change: We are incredibly excited about the opportunity for Dr. <unk>.

Speaker Change: Which will be referred to as the Encino commercial Onboarding and account opening solution and look forward to expanding this offering for U S enterprise customers later this year.

Pierre Naude: Having laid a foundation with an integrated platform of best-in-class solutions, we are uniquely positioned to continue leading the digital transformation of financial services with automation, data, and intelligence. Our newest NIC offering does exactly that.

Dr. <unk>: Having laid the foundation with an integrated platform of best in class solutions. We are uniquely positioned to continue leading the digital transformation of financial services with automation data and intelligence.

Pierre Naude: Continuous credit monitoring leverages our partner, Rich Data Companies' AI decisioning platform, to automate what were previously manual loan review tasks at the customer and portfolio level. Through this collaboration, we are setting a new standard in how financial institutions manage credit risk. We were pleased to announce M&T, an Ncino customer since 2016, as our first U.S. customer on continuous credit monitoring. The solution will enable M&T to detect more early warning signs and provide insights to its employees to drive even more timely and tailored banking experiences for its clients.

Dr. <unk>: Our newest Nick offering best exactly that continuous credit monitoring Leverages, our partners rich data companies AI Decisioning platform to automate what were previously manual loan review tests at the customer and portfolio level.

Dr. <unk>: Through this collaboration we are setting a new standard in our financial institutions manage credit risk.

Speaker Change: We were pleased to announce empty and then senior customer since 2016, as our first U S customer on continuous credit monitoring.

Speaker Change: This solution will enable <unk> to detect more early warning signs and provide insights to <unk> employees to drive even more timely and tailored banking experiences for their clients.

Pierre Naude: This is just one example of how key partnerships extend and enhance our platform. And perhaps the most innovative developments shown at Insight were the banking advisory products. We demonstrated how we have productized generative AI to automate the creation of deal and credit memos, to quickly interpret policies, to chat with, upload, locate, and file documents, and to turn PDFs into data.

Speaker Change: This is just one example of our key partnerships extend and enhance our platform.

Speaker Change: And perhaps the most innovative development shown that insight where the banking adviser products. We demonstrated how we are product hoist generative AI to automate the creation of deal and credit memos to quickly interpret policies to chat with upload locate and file documents and <unk> <unk> PD.

Speaker Change: Yes into data.

Pierre Naude: Our customers are so excited by this breakthrough technology that we actually got reprimanded by the fire marshal for overcrowding at the Insight Banking Advisor booth. As a reminder, Ncino first earned our customers' trust as we led them on the journey of cloud adoption. Our goal is to install that same trust as a partner in the journey to adopt AI. Ncino is differentiated as a vendor in financial services, not only by our global reach and ability to serve institutions of all sizes.

Speaker Change: Our customers are so excited by this breakthrough technology that we actually got rep reminded by the fire Marshal for overcrowding of the insight banking adviser booths.

Speaker Change: As a reminder.

Speaker Change: <unk> first earned our customers' trust as we let them on the journey of cloud adoption.

Speaker Change: Our goal is to install that same trust as their partner in the journey to adopt AI.

Speaker Change: And seniors differentiator as the vendor in financial services, not only by our global reach and inability to serve institutions of all sizes, but by being home to the mission critical lending account opening and onboarding processes across a single platform for all of our financials.

Pierre Naude: But by being home to the mission-critical lending, account opening, and onboarding processes across a single platform for all of our financial institutions' products and services. Ncino's roots are in business process reengineering, and with AI, we have the ability to drive intelligence and automation like never before. With that, I'll turn the call over to Greg to take us through the financials. Thank you, Pierre.

Speaker Change: Institutions products and services at.

Speaker Change: <unk> roots are in the business process reengineering and with AI, we have the ability to drive intelligence and automation like never before.

Speaker Change: With that I'll turn the call over to Greg to take us through the financials.

Gregory D. Orenstein: And thanks, everyone, for joining us this afternoon to review our first 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 gap metrics can be found in today's earnings release, which is available on our website and as an exhibit to the Form 8K furnished with the SEC just before this call. We are very pleased with our first quarter financial results. Total revenues for the first quarter of fiscal 25 were $128.1 million, an increase of 13% year over year.

Gregory D. Orenstein: Thank you Pierre and thanks to everyone for joining US this afternoon to review our first quarter fiscal 2025 financial results.

Please note that all numbers referenced in my remarks are R&D non-GAAP basis, unless otherwise stated.

Gregory D. Orenstein: 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.

Gregory D. Orenstein: Subscription revenues for the first quarter were $110.4 million, an increase of 13% year-over-year, representing 86% of total revenue. As previously discussed, revenue growth rates this year are being impacted by the heightened churn we saw last year, particularly in the IMB market. Churn in the first quarter did moderate as expected, and while we will continue to closely monitor the interest rate environment, our churn expectations for the rest of this year remain in line with the $20.5 million we discussed for the full year.

Gregory D. Orenstein: We are very pleased with our first quarter financial results total revenues for the first quarter of fiscal 'twenty, five or $128 1 million, an increase of 13% year over year.

Gregory D. Orenstein: Professional Services revenues were $17.7 million in the quarter, growing 8% year over year. Non-U.S. revenues were $25.8 million, or 20% of total revenues in the first quarter, up 34% year over year. Non-GAAP gross profit for the first quarter of fiscal 25 was $84.4 million, an increase of 14% year-over-year. Non-GAAP Gross Margin was 66% compared to 65% in the first quarter of fiscal

Gregory D. Orenstein: Subscription revenues for the first quarter were $110 $4 million, an increase of 13% year over year, representing 86% of total revenues.

Gregory D. Orenstein: As previously discussed revenue growth rates. This year are being impacted by the heightened churn we saw last year, particularly in the <unk> market.

Gregory D. Orenstein: Churn in the first quarter did moderate as expected and while we will continue to closely monitor the interest rate environment, our churn expectations for the rest of this year remain in line with the $25 million, we discussed for the full year.

Professional services revenues were $17 $7 million in the quarter growing 8% year over year.

Gregory D. Orenstein: Non U S revenues were $25 $8 million or 20% of total revenues in the first quarter up 34% year over year.

Gregory D. Orenstein: non-GAAP gross profit for the first quarter of fiscal 'twenty five was $84 4 million.

Gregory D. Orenstein: An increase of 14% year over year.

Gregory D. Orenstein: non-GAAP gross margin was 66% compared to 65% in the first quarter of fiscal 'twenty four.

Gregory D. Orenstein: Our subscription gross margins reflect approximately 70 basis points of benefit from improved unit economics under our agreement with Salesforce. We expect continued subscription gross margin improvement in line with the 1% increase for fiscal 25 we discussed last quarter, as we lap annual billing events for existing customers and have the opportunity to move more of them on to our new Salesforce pricing. Non-GAAP operating income for the first quarter of fiscal 25 was $24.4 million, compared with $10.9 million in the first quarter of fiscal 24.

Gregory D. Orenstein: Our subscription gross margins reflect approximately 70 basis points of benefit from improved unit economics under our agreement with Salesforce.

Gregory D. Orenstein: We expect continued subscription gross margin improvement in line with the 1% increase for fiscal 'twenty five we discussed last quarter as.

Gregory D. Orenstein: As we lap annual billing events for existing customers and have the opportunity to move more of them on to our new salesforce pricing.

Gregory D. Orenstein: non-GAAP operating income for the first quarter of fiscal 25 was $24 4 million compared with $10 9 million in the first quarter of fiscal 'twenty four.

Gregory D. Orenstein: Our non-GAAP operating margin for the first quarter was 19% compared with 10% in the first quarter of fiscal 24. Our operating margin benefited from hiring being slightly behind plan in the quarter, favorable insurance renewals, and improvement in bad debt expense, particularly in the IMB space. Non-GAAP net income attributable to Ncino for the first quarter of fiscal 25 was $22 million or $0.19 per diluted share compared to $8 million or $0.07 per diluted share in the first quarter of fiscal 24.

Gregory D. Orenstein: Our non-GAAP operating margin for the first quarter was 19% compared with 10% in the first quarter of fiscal 'twenty four.

Gregory D. Orenstein: Our operating margin benefited from hiring being slightly behind plan in the quarter.

Gregory D. Orenstein: Favorable insurance renewals and improvement in bad debt expense, particularly in the <unk> space.

Gregory D. Orenstein: non-GAAP net income attributable to Encino for the first quarter of fiscal 25 was $22 million or <unk> 19 per diluted share compared to $8 million or <unk> <unk> per diluted share in the first quarter of fiscal 'twenty four.

Gregory D. Orenstein: Our remaining performance obligation, or RPO, increased to $1.07 billion as of April 30, 2024, up 17% over $914 million as of April 30, 2023. Additionally, with $702 million in the less than 24 months category, up 13% from $623 million as of April 30, 2023. We had another strong expansion quarter with contract extensions accompanying those deals. Thus, we had healthy contract duration ads that accompanied the incremental ACV. We ended the quarter with cash and cash equivalents of $134.8 million, including restricted cash.

Gregory D. Orenstein: Our remaining performance obligation or <unk> increased to $1.07 billion as of April 32024 up 17% over $914 million as of April 32023 with.

Gregory D. Orenstein: With $702 million in the less than 24 months category up 13% from $623 million as of April 32023.

Gregory D. Orenstein: We had another strong expansion quarter with contract extensions accompanying those deals so.

Gregory D. Orenstein: So we had healthy contract duration ads that accompanied the incremental ACD.

Gregory D. Orenstein: We ended the quarter with cash and cash equivalents of $134 8 million, including restricted cash.

Gregory D. Orenstein: Net cash provided by operating activities was $54.4 million compared to $31.3 million in the first quarter of fiscal 24. Capital expenditures were $342,000 in the quarter, resulting in free cash flow of $54.1 million for the first quarter of fiscal 25.

Gregory D. Orenstein: Net cash provided by operating activities was $54 4 million compared to $31 3 million in the first quarter of fiscal 'twenty four.

Speaker Change: Capital expenditures were 342000 in the quarter, resulting in free cash flow of $54 1 million for the first quarter of fiscal 'twenty five.

Gregory D. Orenstein: As a reminder, the first quarter is typically our seasonally strongest cash generation quarter. As a result, you will note our statement of cash flow reflects investing activity net of acquired cash of $91.2 million. This reflects $19.9 million of all-cash purchase consideration for Allegro and $74.3 million for Doc Fox, including approximately $2 million of purchase consideration that was recorded as post-combination expense which was excluded from our non-GAAP results. With the addition of indirect lending functionality, Allegro expands the market opportunity for our consumer lending product to a larger number of banks and credit unions, which we expect will further increase our competitiveness in consumer lending, though the revenue contribution expected this fiscal year from this technology is immaterial. We borrowed $75 million on our revolving credit facility to finance the Doc Fox acquisition and subsequently repaid $20 million within the quarter.

Speaker Change: As a reminder, the first quarter is typically our seasonally strongest cash generation quarter.

Speaker Change: You will note our statement of cash flow reflects investing activity net of acquired cash of $91 $2 million.

This reflects $19 9 million of all cash purchase consideration for Allegro and $74 3 million for Doc Fox, including approximately $2 million of purchase consideration that was recorded as post combination expense, which was excluded from our non-GAAP results.

Speaker Change: With the addition of indirect lending functionality Allegro expands the market opportunity for our consumer lending product to a larger number of banks and credit unions, which we expect will further increase our competitiveness and consumer lending.

Speaker Change: The revenue contribution expected this fiscal year from this technology is immaterial.

Speaker Change: We borrowed $75 million on our revolving credit facility to finance, the Doc Fox acquisition, and subsequently repaid $20 million within the quarter we.

Gregory D. Orenstein: We plan to pay down the remaining $55 million of borrowed principal during the rest of this fiscal year as we continue to generate cash. We will use cash on hand to fund the acquisition of Allegra. Turning to guidance for the second quarter, we expect total revenues of $130.5 million to $131.5 million, with subscription revenues of $112.5 million to $113.5 million. This guidance assumes year-over-year subscription revenue growth of 13% to 14%. For fiscal year 25, we continue to expect total revenues of $538.5 million to $544.5 million, with subscription revenues of $463 million to $469 million.

Speaker Change: We plan to pay down the remaining $55 million of borrowed principal during the rest of this fiscal year as we continue to generate cash.

Speaker Change: We used cash on hand to fund the acquisition of Allegro.

Speaker Change: Turning to guidance for the second quarter, we expect total revenues of $130 5 million to $131 $5 million with subscription revenues of $112 5 million to $113 $5 million.

Speaker Change: This guidance assumes year over year subscription revenues growth of 13% to 14%.

Speaker Change: We're fully fiscal year 'twenty five we continue to expect total revenues of $538 5 million to 502.

Speaker Change: $544 5 million.

Speaker Change: With subscription revenues of 463 million to $469 million.

Gregory D. Orenstein: This full-year guidance assumes year-over-year subscription revenues growth of 13% to 15%. Non-GAAP operating income in the second quarter is expected to be approximately $17 million to $18.5 million, and non-GAAP net income attributable to Ncino per share is expected to be $0.12 to $0.13. This is based upon a weighted average of approximately 117 million diluted shares outstanding.

Speaker Change: This full year guidance assumes year over year subscription revenues growth of 13% to 15%.

Speaker Change: non-GAAP operating income in the second quarter is expected to be approximately 17 million to $18 5 million.

Speaker Change: And non-GAAP net income attributable to encino per share to be 12 to 13.

Speaker Change: This is based upon a weighted average of approximately 117 million diluted shares outstanding.

Gregory D. Orenstein: Insight is expected to add approximately $2 million of incremental sales and marketing expense in the second quarter on a sequential basis. Additionally, annual merit increases affected in April plus salaries and wages of people onboarded with the acquisitions will contribute to a higher quarterly operating expense run rate. Also, in light of the incredible customer demand we saw at Insight for expanded product capabilities, we plan to reinvest some of the Q1 bottom line overperformance in sales and marketing to drive even greater adoption of our newer solutions and to more aggressively pursue the consumer lending opportunity in the credit union market.

Speaker Change: Insight is expected to add approximately $2 million of incremental sales and marketing expense in the second quarter on a sequential basis.

Speaker Change: Additionally, annual merit increases affected in April.

Speaker Change: Plus salaries and wages of people onboarding with the acquisitions will contribute to a higher quarterly operating expense run rate.

Speaker Change: Also in light of the incredible customer demand, we saw at insight for expanded product capabilities. We plan to reinvest some of the Q1 bottom line over performance in sales and marketing to drive even greater adoption of our newer solutions and to more aggressively pursue the consumer lending opportunity in the credit Union market.

Gregory D. Orenstein: That said, we are increasing our non-GAAP operating income outlook for the full year and now expect non-GAAP operating income for fiscal 25 to be $86 million to $89 million. Full fiscal year 25 non-GAAP net income attributable to Ncino per share is expected to be $0.65-$0.68 based upon a weighted average of approximately 117 million diluted shares outstanding.

Speaker Change: That said, we are increasing our non-GAAP operating income outlook for the full year and now expect non-GAAP operating income for fiscal 'twenty five to be $86 million to $89 million.

Speaker Change: Full fiscal year 'twenty five non-GAAP net income attributable to <unk> per share is expected to be 65 to 68.

Speaker Change: Based upon a weighted average of approximately $117 million diluted shares outstanding.

Operator: With that, Operator, we'll open the line for questions. Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again.

With that operator, we will open the line for questions.

Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, one moment for questions.

Operator: One moment for questions. Our first question comes from Adam Hotchkiss with Goldman Sachs. He may proceed. Great, thanks so much for taking the questions.

Speaker Change: Our first question comes from Adam <unk> with Goldman Sachs. You May proceed.

Pierre Naude: Pierre, I appreciate the comments you gave around insight. We'd love for you to just dig a little bit more into what are some of the key things you learned from customer conversations? What are they asking for around themes like AI and innovation? And then any additional color you can give around the 100 new sales leads generated there? What products were people really most focused on?

Adam Charles Bergere: Great. Thanks, so much for taking the questions up here I. Appreciate the comments you gave around inside would love for you to just take a little bit more into what are some of the key things you learned from customer conversations what are they.

Speaker Change: Are you asking for around that it seems like AI and innovation.

Speaker Change: Any incremental color you can give around the 100, new sales leads generated there what products or people most focused on really appreciate it.

Pierre Naude: Yeah, thanks a lot for that question. You know, it's interesting. AI has had this hype since October of being around the market; you get lots of very important senior people like Jamie Dimon talking about it. But then there's a problem, you know, with a regulated industry, lots of laws and regulations, lots of privacy, a lot of data issues. If you feed bad data into AI, you get bad outcomes, okay? So what I'm seeing is the majority of people are very excited, but they need guidance. They need to understand what tools can be used, how I stay compliant, and how I do, don't do the wrong things with it.

Speaker Change: Okay. Thanks, a lot for that question.

Speaker Change: It's interesting.

Speaker Change: <unk> got this hype since October being around the market you get lots of very important senior people like Jamie Diamond talking about it but then there's a problem with a regulated industry lots of laws and regulation lots of privacy of data issues.

Speaker Change: Feed bad data into AI bad outcomes. Okay. So what I'm seeing is the majority of people are very excited but they need guidance. They do understand what tools can be used how do I stay compliant how do I don't do the wrong things with it. So what we've seen is and Thats why the fire Marshal concept in the conduit comes in Israel.

Pierre Naude: So what we've seen is, and this is why the fire master concept and the climate come in as well, they are really hungry for solutions that will drive efficiency and help them to operate the bank better. And they need people like us to actually build those tools to be very purpose-built and very narrow in the focus of what solutions or what problems they solve, okay? That way, they feel secure.

Speaker Change: They are really hungry for solutions that will drive efficiency and help them to operate the bank better and they need people like us to actually both those tools to be very purpose built and very narrow in the focus of what solutions are what problems. They solve okay. That's the way they feel secure and so we have to take this journey with them and <unk>.

Pierre Naude: And so we have to take this journey with them and actually build solutions that are very purpose-driven; they're within a very specific focused problem set. And that's where the industry will come along over time, because, as you can imagine, banking is a conservative business, and it's about money and regulation and compliance. So that's where I saw most of the excitement was the fact that we have the platform in place, but you have to do that first, get all your business processes right, get the platform laid out, and then after that, you can literally start taking those platform steps and compressing them through automation and the usage of data and analytics.

Speaker Change: Actually both solutions, that's very purpose driven.

Speaker Change: A very specific focused problem set.

And that's where the industry will come along over time, because as you can imagine banking is a conservative business.

Speaker Change: It's about money and regulation and compliance.

Speaker Change: So thats, where I saw most of the excitement was that was that the fact that we have the platform in place, but you have to do that first because audio business processes right get the <unk>.

Speaker Change: <unk> laid out and then after that you can literally stopped taking that platform steps and compress them through automation and the usage of data and analytics.

Pierre Naude: And Adam, just on your question about the 100 sales leads, that was specifically for DocBox, which we're now calling our commercial onboarding and deposit account opening solution, but that was specifically at their booth. So a lot of excitement about bringing that technology into the Ncino family. Okay, great. That's really helpful.

Speaker Change: And Adam just on your question about the 100 sales leads that was specifically for for dark boxes, which we're now calling our commercial onboarding and deposit account opening solution, but that was specifically at at their booth. So a lot of excitement about.

Speaker Change: Bringing that technology into the <unk> family.

Speaker Change: Okay.

Speaker Change: Okay, Great. That's really helpful. And then and then Greg just on the margin consideration there I think you talked about.

Gregory D. Orenstein: And then, Greg, just on the margin consideration there, I think you talked about hiring being a little bit behind schedule. What do you need to see either from a revenue perspective or other signals to lean in on the hiring side? And then, you know, how do we think about, you know, some of the sales and marketing expenses within the context of that relative to the margin expansion plans that you laid out at Investor Day last year?

Speaker Change: Hiring being a little bit behind plan, what do you need to see.

Speaker Change: From a revenue perspective or other signals to lean in on the hiring side and then how do we think about some of the sales and marketing expense within the context of that relative to the margin expansion plans that you laid out at Investor day last year.

Gregory D. Orenstein: So from a hiring perspective, again, our folks have got, you know, the green light to hire. I think what we've seen over the last quarter or three is, you know, more and more talent in the market. And I think our teams are being very methodical about who they're hiring and bringing in to help drive the company going forward.

Speaker Change: So from a hiring perspective again, our folks who've got the green light to hire.

Speaker Change: I think what we've seen over the last quarter or three is.

More and more talent in the market.

Speaker Change: And I think our teams are being very methodical about who they're hiring and bringing in to to help drive the company going forward. So.

Speaker Change: So from that perspective, it's nothing from the CFO office for example.

Speaker Change: And it's all around making sure we've got the right people, who can help drive growth.

Speaker Change: Particularly when we talk about the breadth of products that we have.

Gregory D. Orenstein: So, from that perspective, it's nothing, you know, from the CFO's office, for example. And it's all around making sure we've got the right people who can help drive growth, particularly when we talk about the breadth of products that we have, you know, going forward. So that's that.

Speaker Change: Going forward so that's that.

Speaker Change: As it relates from a margin perspective again, we're going to take a little bit of jump in our opex lines in the second quarter as I talked about and gave some reasons, but once we get beyond that again, we expect it to be fairly stable as the year progresses.

I think we've talked about on our last call and before we feel very comfortable with the head count that we've got we're continuing to add in places, where we see opportunities again to drive growth and drive efficiencies.

Speaker Change: Youll note that our head count is up but thats really solely related to the acquisitions that we did and the employees that we bought on from from those two transactions.

Speaker Change: Okay Super helpful. Thanks, Pierre Thanks, Greg.

Speaker Change: Thanks, Adam.

Speaker Change: Thank you one moment for questions.

Speaker Change: Our next question comes from Ryan Tomasello with K VW you May proceed.

Ryan Tomasello: Hi, good morning, Thanks for taking the questions.

Gregory D. Orenstein: You know, as it relates from a margin perspective, again, we're going to take a little bit of a jump in our OPEX lines in the second quarter, as I talked about and gave some reasons. But, you know, once we get beyond that, again, we expect it to be fairly stable as the year progresses. You know, I think we've talked about this in our last column before; we feel very comfortable with the headcount that we've got.

Ryan Tomasello: Peter last quarter, you talked about needing to hit roughly 40% of your annual bookings target to hit the guidance for the year. So just given the strong start to the year.

Speaker Change: Can you provide some context around where that visibility stand today and maybe somewhere.

Speaker Change: The puts and takes have been.

Speaker Change: And just given the strong bookings performance to start the year, maybe just help us understand the drivers of the maintain top line guide for the year. Thanks.

Gregory D. Orenstein: We're continuing to add in places where we see opportunities again to drive growth and drive efficiencies. You know, you'll note that our headcount is up, but that's really solely related to the acquisitions that we did and the employees that we bought on from those two transactions. Okay, super helpful.

Peter: Yes, so look.

Pierre Naude: Thanks, Pierre. Thanks, Gregory. Thanks, Adam.

Speaker Change: Firstly first quarter was a continuation of the momentum of fourth quarter and that gives us confidence to maintain the guidance and does exactly our expressed our market sentiment is at this point.

Speaker Change: If you look at just further color on the bookings.

Speaker Change: It was about 60 40 commercial.

I want to emphasize for all of you that the member.

Operator: Thank you. One moment for questions. Our next question comes from Ryan Tomasello with KVW. You may proceed.

Speaker Change: If you look historically at <unk>. So you look at a workflow solution.

Speaker Change: We want to cover all the people that is the breadth, we've taken that grips and expanded that into small business as well as consumer deposit account opening and now onboarding. Okay.

Speaker Change: So that's how we get users, but now there is a depth issue and the depth is all about intelligence data AI analytics machine learning.

Speaker Change: And we literally kind of go deeper into the bank and look at very specific roles and see how we can replace it and that add tremendous value.

Speaker Change: Through the efficiency in the operations of the bank. So we see that customer base of commercial as a tremendous asset to drive more automation.

Speaker Change: And to actually get more customer value out of it.

Operator: Hi everyone, thanks for taking the question. Pierre, last quarter you talked about needing to hit roughly 40% of your annual booking target to hit the guidance for the year. So, you know, just given the strong start to the year, could you provide some context around where that visibility stands today and maybe some of where the puts and takes have been? And, just given the strong bookings performance to start the year, maybe just help us understand the drivers of the maintained top line guide for the year. Yeah, so look, firstly, the first quarter was a continuation of the momentum from the fourth quarter.

Speaker Change: So I would say that the first quarter confirms for me our confidence on.

Pierre Naude: And that gives us confidence to maintain the guidance. And this is exactly how our market sentiment is expressed at this point. If you look at just further color on the bookings, it was about 60-40 commercial.

Speaker Change: On the downside you have to remember we have to look at churn and we always have to understand what is the churn impact going to be and.

Speaker Change: Since I haven't seen any cuts in rates, although mortgages only about 15% 16% of total revenue of the company.

Speaker Change: Does have an impact and then the mortgage business is still running flat. Although we are taking market share over time, because we are growing our mortgage business.

Speaker Change: What obviously is dilutive to growth overall, because it's growing slightly slower than the rest of the company.

Speaker Change: So I would say for right now we're going to hold what we have and we will see how the market develops by midyear.

Ryan Tomasello: Just to expand on that Ryan from a mortgage perspective that business still growing almost double digits. This quarter again the team continuing to do a great job in a difficult market. We added 15, new logos.

Ryan Tomasello: In the quarter.

Ryan Tomasello: But it is it is dilutive to growth and.

Speaker Change: You would have heard my comments around bad debt, particularly on the <unk> side subsiding, a little bit and so I think what we've seen is somewhat what we experience mainly last year was a lot of these RMB. These mortgage lenders who are just shutting their doors.

Speaker Change: We've seen that I'd say.

Speaker Change: Slow.

Speaker Change: It's still expect some of those to happen, but not with the frequency with they did maybe last year and really as we think about churn in this year and I think I touched upon it on the last call, it's really more around M&A.

Speaker Change: As you are left with a smaller number of larger better capitalized <unk> and some of those are becoming aggressive in taking market share.

Speaker Change: Fortunately, we think many of those are our customers. So we hope that theres opportunities for for growth through M&A there.

Speaker Change: But again, sometimes you end up on the wrong side of a train.

Speaker Change: And so as we think about the guidance.

I spoke to you guys in late March when we gave that guidance, we want to be prudent as we think about the rest of the year.

Speaker Change: Great I appreciate all that color and then.

Speaker Change: Just a bigger picture one here peer or as you think about potential catalysts on the horizon in driving demand and bookings over over maybe the next six to 12 months I.

Speaker Change: Was hoping you can just help us contextualize the importance of the different variables in play between some of the more obvious ones like rates. The U S. Presidential election, maybe just broader urgency that AI is putting.

Speaker Change: On the industry.

Speaker Change: How would you rank order the importance among those and any other major variables that come to mind as you think about.

Speaker Change: The bookings environment over the next.

Speaker Change: Six to 12 months.

Speaker Change: The first thing you have to realize is that banks this year operate under a lot more stability.

Speaker Change: A stable macro environment with the rates being stable.

Speaker Change: Last year was all about survival when you have a liquidity crisis. The management team's done OLED progress through a very tactical mindset to just survive.

Speaker Change: This year I would say the bruised home that experience, but they are carefully moving forward with more strategic options. So what I find is a lot of scrutiny in deals.

Speaker Change: And really making sure that they prioritize their spending in the right places Fortunately with what we do we get <unk> at the top of the list. Many many times however.

Speaker Change: There is still a posture of conservatism that you can see.

Speaker Change: Now what's going to happen as time goes.

Speaker Change: And the rates stay stable and then upcoming maybe.

Speaker Change: Maybe coming down a little bit and look what it is.

Speaker Change: It's going to be a quarter point cut so it's not material in dollar terms, but it's more of a sentiment and a signal to the market. What youll see is that banks will become more aggressive and realizing they have to run an efficient operation.

Speaker Change: When you come to the election, the changes of administrations. We started this company under Obama.

Speaker Change: We've added under Trump portfolios, we now under <unk>. So these administrations come and go.

Speaker Change: It's more compliance oriented we've got the tools to solve that for you maybe its more growth driven we've got the tools to help your growth. If it's all about profitability and efficiency. We've got the tools to drive automation and help you to become more efficient.

Speaker Change: But all the bankers, though they have to come to an efficiency ratio of around $50, 51% some of them by top banks around around $39, 40% okay.

Speaker Change: So you can operate these banks at very efficient and highly profitable margins by utilizing encino and thats. The message, we take out and Thats the message that they confirm for us in our surveys and the feedback we're getting.

Speaker Change: Great. Thanks for taking the questions.

Brian: Thanks, Brian.

Speaker Change: Thank you one moment for questions.

Speaker Change: Our next question comes from Brent <unk> with Piper Sandler you May proceed.

Brent: Good afternoon.

Speaker Change: Right that I guess PPR for you if I look at dock Fox Allay grow it looks like you are.

Brent: <unk>.

Speaker Change: Reinvesting here in that community banks small business area.

Speaker Change: What what's driving.

Speaker Change: The need or the opportunity is there some pull there where you decided to.

Speaker Change: So buy versus build because of the demand was there walk walk us through the logic in.

Speaker Change: And what Youre hearing.

Speaker Change: The sense of urgency from some of those community banks and why you are leaning in here now.

Pierre Naude: And I want to emphasize for all of you that the member, If you look historically at commercial, you look at a workflow solution that we want to cover all the people. That is the breadth. We've taken that breadth and expanded that into small business as well as consumer deposit account opening and now onboarding, okay? So that's how you get users. But now there's a depth issue.

Speaker Change: Yes, So let me talk about Onboarding first look Onboarding has always been an interest of ours, but it came in pecking order I wanted to do small business and consumer lending and deposit account opening first but onboarding for commercial businesses is a highly complex.

Speaker Change: And it literally is as bigger effort. These two regions. Okay. Some of these deposit account openings.

Speaker Change: Because of regulation and money laundering could take up to six months for them to get the account opened depending our complex and we've seen international business. Okay. So automating that and helping banks for that is a tremendously attractive market and Dr. Crops. As you know, we always talk buildings with the community bank market. Our dock crops are going to accelerate that in the moment that fully.

Speaker Change: Integrated that product will go all the way up to enterprise.

There is tremendous pool for them.

Speaker Change: And that by the way will then go internationally and be a global product. So.

Speaker Change: Onboarding of commercial customers was always an interest to US was the natural next step in building out the platform.

Speaker Change: Let me come to a Lego Lego was more of an impediment in the credit Union market, where a lot of indirect auto lending happens.

Speaker Change: Some banks are doing it.

Speaker Change: That business falls out of favor and vacuum flavor, depending on economic climates, but the credit union market. They see it as an essential member service.

Speaker Change: So they actually have many of these dealers signed up and you can like do you go to the data that you gave the man behind the curtain and you get your financing okay.

Speaker Change: And Thats, where the solution is helping them to connect with these dealerships and do that indirect lending.

Speaker Change: And it's highly complex deeply integrated solution and for us to have both that would have added no value. It's more of a commodity in this product.

Speaker Change: As more as an add on to consumer lending. So when you go in you can replace all of our new technology with the old stuff, they've got and then <unk>.

Speaker Change: Covering this indirect lending issue that if you don't have that they cannot select you because then they have multiple vendors.

Speaker Change: Where that one came true by the way indirect lending does apply also to credit unions to banks and it goes all the way up to enterprise.

Brent: No. It's a U S based product, yes, Brent I think I would also view that our view that the Allegro again, as we think about how far our consumer lending.

Brent: Solution has come and the confidence we have in it.

Brent: Evidenced by the enterprise bank that we highlighted a quarter or two ago that that purchased it I think it's really rounding out the functionality to bring to market.

Peter: As Peter noted frequently you'd have an RFP, where it's a box we would not be able to check.

Peter: And you'd get dinged for that.

Peter: But ultimately now we're able to give this net new technology and we think the market is asking for it because.

Peter: Because we don't see other net new technology like what we have on the consumer side out there.

Speaker Change: Great helpful color, there and then just Greg for you one quick follow up on <unk>.

Speaker Change: The growth did accelerate here on a year over year basis in the quarter.

It sounds like you're flagging uncertain, continuing uncertainty in that in that mortgage market, but was all of.

Speaker Change: The backlog build here the quarter tied to kind of commercial was it like strong renewal just any additional color on on why that CRP and growth actually accelerated even in a argued.

Speaker Change: Arguably a very tough environment.

Speaker Change: Yes look it was a good quarter in.

Speaker Change: And also just the mix that we had which we always highlight can can impact.

Speaker Change: Our Po came into play we talk about the commercial side.

Speaker Change: We had three commercials I know, we frequently get questions about commercial saturation, we had three customers that each expanded with us over 40% from an SUV perspective, just solely expanding their commercial usage of us this quarter.

Speaker Change: And so we still see plenty of opportunity on the on the commercial side.

Speaker Change: The other thing with mixed Brent sure.

Speaker Change: A little bit of the enterprise customers again coming back to to buy.

Speaker Change: As the events of last year in the liquidity crisis get further and further in the rearview mirror.

Speaker Change: So that's another thing that that I would highlight and I guess finally, just appears earlier comments when we talk about commercial.

Speaker Change: And again people talk about commercial lending we have the historic workflow commercial lending business that we started from but as we think about commercial and as you guys think about commercial we really would.

Pierre Naude: And the depth is all about intelligence, data, AI, analytics, and machine learning. And we're literally going to go deeper into the bank and look at very specific roles and see how we can replace them. And that adds tremendous value to the efficiency and the operations of the bank. So we see that commercial customer base as a tremendous asset to drive more automation and to actually get more customer value out of it. So I would say that the first quarter confirmed for me our confidence.

Pierre Naude: On the downside, you have to remember, we have to look at churn, and we always have to understand what the churn impact is going to be. And since I haven't seen any cuts in rates, although mortgage is only about 15, 16% of total revenue of the company, it does have an impact. And that mortgage business is still running flat, although we're taking market share all the time because we're growing our mortgage business.

Pierre Naude: But obviously, it's diluted growth overall because it's growing slightly slower than the rest of the company. So I'd say for right now, we're going to hold what we have, and we'll see how the market develops by mid-year. Yeah, just to expand on that, Ryan, from a mortgage perspective, that business is still growing almost double digits this quarter. Again, the team is continuing to do a great job in a difficult market. We added 15 new logos in the quarter. But it is diluted to growth.

Gregory D. Orenstein: And, you know, you would have heard my comments around bad debt, particularly on the IMB side, subsiding a little bit. And so I think what we've seen is somewhat what we experienced mainly last year, a lot of these IMBs, these mortgage lenders who are just shutting their doors. We've seen that, I'd say, you know, slow, you know, still expect some of those to happen, but not with the frequency with which they did maybe last year.

Speaker Change: Urge you or encourage you to think about it more broadly.

With all of the other things that we're bringing to those commercial customers.

Speaker Change: Like the continuous credit monitoring that we announced with <unk> like banking adviser like Doc Fox like Otto spreading like commercial pricing and profitability and so as we look at that commercial.

Speaker Change: Customer base again, we view it as a tremendous asset and we think there is theres a lot of runway there for us.

Speaker Change: A lot of cross sell for sure very clear thank you.

Brent: Thanks Brent.

Speaker Change: Thank you one moment for questions.

Gregory D. Orenstein: And really, as we think about churning this year, and I think I touched upon it on the last call, it's really more around M&A. As you know, you're left with a smaller number of larger, better capitalized IMBs, and some of those are becoming aggressive and taking market share. You know, fortunately, we think many of those are our customers. So we hope that there's opportunities for growth through M&A there. But again, sometimes you end up on the wrong side of a trade.

Our next question comes from Alex Sklar with Raymond James You May proceed.

Gregory D. Orenstein: And so as we think about the guidance, you know, you guys in late March, we gave you that guidance. We want to be prudent as we think about the rest of the year. Great. I appreciate all that color.

Alexander James Sklar: Great. Thank you Pierre great to hear on the record first quarter bookings I wanted to dig into your comments in particular on the U S. Tier one in enterprise activity. I think you said it started coming back what did you see from that segment in the quarter and how should we think about that segment contributing to bookings.

Alexander James Sklar: Year relative to kind of its current mix of your business today.

Pierre Naude: And then, you know, just a bigger picture one here, Pierre, as you think about potential catalysts on the horizon driving demand and bookings over maybe the next six to 12 months. I was hoping you could just help us contextualize the importance of the different variables. In play between, you know, some of the more obvious ones like rates, the US presidential election, maybe just the broader urgency that AI is putting on the industry to innovate innovate.

Pierre Naude: How would you rank the importance among those and any other major variables that come to mind as you think about the Bookings Environment over the next, yeah, six to 12 months? The first thing you have to realize is that banks this year operate under a lot more stability and a stable macro environment with the rates being stable. Last year was all about survival. When you have a liquidity crisis, management teams turn all their focus to a very tactical mindset to just survive. This year, I would say they are bruised from that experience.

Pierre: What im seeing is the same excitement obviously their biggest staffs in a bit more sophistication on the it side, but the same excitement with the same questions around the usage of AI and data.

Pierre Naude: But they are carefully moving forward with more strategic options. So what I find is a lot of scrutiny in deals and really making sure that they prioritize their spending in the right places. Fortunately, with what we do, we get prioritized at the top of the list many, many times. However, there is still a posture of conservatism that you can see.

Pierre Naude: Now, what's going to happen as time goes by and the rates stay stable and then start going up, maybe coming down a little bit? And look, when it's cut, it's going to be a quarter point cut. So it's not material in dollar terms, but it's more of a sentiment and a signal to the market. What you'll see is that banks will become more aggressive, realizing they have to run an efficient operation. When you come to the election and the changes in administrations, we started this company under Obama, and we ran it under Trump for four years. We're now under Biden.

Speaker Change: Remember if you look at the critical mass of data by bank.

Speaker Change: You could say that JP Morgan Chase and maybe at Wells Fargo has got critical mass.

Speaker Change: But the rest of them don't have enough of our loan book to actually have a representative picture of all the areas in states in the U S.

Pierre Naude: So these administrations come and go. If it's more compliance-oriented, we've got the tools to solve that for you. If it's more growth-driven, we've got the tools to help you grow. If it's more about profitability and efficiency, we've got the tools to drive automation and help you to become more efficient. But all the bankers know they have to come to an efficiency ratio of around 50, 51 percent. Some of my top banks run around 39, 40 percent.

Speaker Change: With our data Lake and the products, we're building on and the way, we actually Anonymize and take these data into our big data Lake.

Speaker Change: And then provide to them much deeper insight into the activities of commercial lending.

Speaker Change: As well as automating the review processes, we all love to think about commercial loan origination.

Pierre Naude: OK, so you can operate these banks at very efficient and highly profitable margins by utilizing Encino. And that's the message we take away. And that's the message that they confirm for us in our surveys and the feedback we're getting. Great, thanks for taking the question. Thanks, Ryan.

Speaker Change: Most of the work actually sits in quarterly.

Speaker Change: And six monthly and annual reviews of existing loans and making sure. The book is priced as well as collateralized and covenant that the right way.

So there is a massive middle back office operation happening without loan origination at all okay and.

Speaker Change: And Thats really the opportunity to drive this automation and Thats fair.

Speaker Change: RBC or insider corporations partnership with US is very helpful. And then you pair that.

Speaker Change: Next to that.

Speaker Change: Generative AI tools, we're putting together in there and it's going to literally removed chunks of processes that we've built over 12 years into the workflow.

Speaker Change: And Thats the interesting part here.

Speaker Change: We can now take a broad footprint of what we laid out for our bank because we know exactly what they do we can automate some of this and drive a lot more efficient in a lower cost operation.

Speaker Change: And we will share in that efficiency as they pay us for these products.

Speaker Change: Okay, Great Yeah, No RBC was a was a big part of though.

Speaker Change: Right.

Speaker Change: Keynote this year so good to hear and then one more for you Pierre ore polygon I don't know if its taking part in the Q&A, but can you just talk about what the launch of simple Nexus the front end the omnichannel capabilities and maybe ill just lumpy from the indirect auto functionality that you talked about in response to Brent Brent question, what does that mean for the retail lending segment.

Speaker Change: I know Greg called out that's one of the areas youre going to spend more on in the back half of the year. So what's changed there in your mind on consumer lending.

Speaker Change: So let's talk about the consumer facing side of this okay.

Speaker Change: American Airlines change their whole booking operations and issuing tickets et cetera, but you still have to make a phone call.

Speaker Change: So the old stuff didn't Bellevue months and help them in the middle back office for us putting up.

Speaker Change: Probably the most sophisticated elegant front end solution, where consumers now can do this stuff and go self service.

Speaker Change: The burden from the bank.

Speaker Change: It gives them a modern platform.

Speaker Change: To drive self service to an extent danone in banking today. Okay. So now all of a sudden people start believing that all that hard work, we did for the middle back office, if you plug that frontline team.

Speaker Change: And drive that consumer adoption and self service they were always covenant toll.

Speaker Change: And Thats the difference that this front end is making it is the final piece of the puzzle.

Speaker Change: But we never wanted to do it until we've got the middle back office clean otherwise you have a good this crew front end and you wait three days for manso Okay.

Speaker Change: Moving to a world where five years from now.

Speaker Change: I believe consumer and small business banking at the low end should be mostly driven by self service and intuitive tools that drives intelligence behind the scenes to advice and help consumers to be totally self service and it should be so simplistic just like your iPhone come in a box you don't get a manual.

Speaker Change: Don't go to a training cost savings is going to happen, we're going to take banking to that same level of efficiency and automation.

Speaker Change: The Allegro one is just to follow on indirect lending because that's what the market's phase once and if they get this end to end solution that can do that as well. They can literally it opened at a place that current disparate systems, they've got between 10 and 15 systems doing all the stuff we're doing.

We can go in with a single platform elegant front and totally different self service you want me to come halfway through application walk into the brands everything is right. There. The brand's first of all pick you up and say, yes, where you left off I'll finish it for you.

Speaker Change: So lots of excitement around that.

Speaker Change: And if you hear the feedback we get from some of our largest customers around the mortgage experience where people literally wrote them, let us to say.

Speaker Change: Want to take the offer wall glass and apply for a mortgage on a very complex product and solution.

Speaker Change: That's the kind of elegance, we want to drive into the market.

Speaker Change: Alright, thanks for that color Pierre.

Speaker Change: Thanks, Alan Thank you Alex.

Operator: Thank you. One moment for questions. Our next question comes from Brent Bracelin with Piper Zandler. You may proceed. Good afternoon.

Speaker Change: One moment for questions.

Speaker Change: Our next question comes from Ken <unk> with Barclays. You May proceed.

Speaker Change: Okay, Great Hey, guys. Thanks for taking my questions here.

Operator: Appreciate that. Pierre, for you, if I look at DocFox, Allegro, it looks like you're, you know, reinvesting here in that community bank, small business area. What's driving the need or the opportunity? Is there some pull there where you decided to buy versus build because the demand was there?

Speaker Change: Peter maybe just.

Speaker Change: Hey, Peter Hey, Greg.

Speaker Change: Peer maybe maybe for you I would love to just.

Speaker Change: Double click a little bit on just the consumer business a little bit.

Speaker Change: To your earlier point like you are kind of building a whole sort of end to end system. There on consumer maybe you could just talk about it from a demand perspective qualitatively how do you feel about the pipeline for consumer lending this year and as that tool set has matured how are you kind of looking at our competitive win rates right now of course.

Speaker Change: All anecdotally.

Speaker Change: Yes, so I would remind you that consumer includes indirect lending mortgage.

Speaker Change: Consumer finance unsecured.

Speaker Change: Secured non real estate.

And then when you get to real estate is mortgage plus helocs et cetera, okay.

Speaker Change: So it's a fairly big bundle and anyone who has been to insight.

Speaker Change: Actually one of the things I noticed is we've got all these consumer products in a different booths and you walk around and it's actually one big consumer platform. Okay.

Pierre Naude: Walk us through the logic and what you're hearing, the sense of urgency from some of those community banks, and why you're leaning in here now. Yeah, so let me talk about onboarding first. Look, onboarding has always been an intrusive hour, but it came in packing order. I wanted to do small business and consumer lending and deposit account opening first. But onboarding for commercial businesses is highly complex, and it literally is as big an effort as these two originate alone. Okay, some of these deposit account openings, because of regulation and money laundering, could take up to six months for them to get the account open, depending on how complex and if it's an international business.

Speaker Change: What we are seeing is.

Speaker Change: That banks have done the commercial piece with us.

Pierre Naude: So automating that and helping banks with that is a tremendously attractive market. And DocCroft, as you know, we always start building for the community bank market. And with DocCroft, I can accelerate that.

Speaker Change: And now the single platform story is resonating they are beginning to see that not only do the doing the investment alright.

Pierre Naude: And the moment they're fully integrated, that product will go all the way up the enterprise. And so there's a tremendous pool for that. And that, by the way, will then go international and be a global product. So the onboarding of commercial customers, which was always an interest to us, was the natural next step in building out the platform. Then we come to Allegro. Allegro was more of an impediment in the credit union market, where a lot of indirect auto lending happened.

And I'll point, you to that $15 billion asset bank debt.

Pierre Naude: Some banks are doing it, and that business falls out of favor and back in favor depending on economic conditions. But credit union markets see it as an essential member service. So they actually have many of these dealers signed up, and you can, like, you know, you go to the dealer, you get the man behind the curtain, and you get your financing. Okay. And that's where the solution is helping them to connect with these dealerships and do that indirectly. And it's a highly complex, deeply integrated solution. And for us to have built that would have added no value.

Speaker Change: <unk> grew ACB seven X by by signing up with us even without having commercial on there yet.

Pierre Naude: It's more of a commodity, and this product, I see it more as an add-on to consumer lending. So when you go in, you can replace all our new technology with the old stuff they've got. And then I've covered this indirect lending issue that if you don't have that, they cannot select you because then they have multiple vendors. That's where that one came from.

Speaker Change: I am seeing demand coming.

Speaker Change: By the way, it's just like the iPhone.

On day, one you love duo Blackberry I have never seen youre, using the Blackberry, but mono potentially add one okay.

Speaker Change: And so it takes people a little bit to say, okay. It's a real now and yesterday you have to realize.

Speaker Change: <unk> cannot afford the personal services for products unprofitable.

Speaker Change: That's a simple math in banks today I meet with many many Ceos of banks and that is the most common theme of platform efficiency as we cannot keep on spending time and money with people product sits unprofitable.

Speaker Change: The automation drive from the efficiency drive is going to do that so by the way. The pipeline is healthy we feel good about it customer references LP and the existing projects, where we're installing consumer is healthy so I feel overall that as we have more success that demand will actually go.

Gregory D. Orenstein: By the way, indirect lending does apply also to credit unions, to banks, and it goes all the way up the enterprise, and it's a U.S.-based product. Yeah, Brent, I think I would also view that the Allegro again, as we think about how far our consumer lending solution has come and the confidence we have in it, you know, is evidenced by that enterprise bank that, you know, we highlighted a quarter or two ago that purchased it. I think it's really rounding out the functionality to bring to market. And as Pierre noted, frequently you'd have an RFP where, you know, it's a box we would not be able to check. And you'd get, you know, a ding for that.

Gregory D. Orenstein: But ultimately, now we're able to give this, you know, net new technology, and we think the market is asking for it because we don't see other net new technology like what we have on the consumer side out there. Great, helpful color there. And just Greg, for you, one quick follow up on CRPO, the growth did it accelerate here on a year-over-year basis in the quarter? It sounds like you're flagging continued uncertainty in that mortgage market.

Speaker Change: Got it got it that makes a ton of sense Gregg maybe for my follow up for you.

Gregory D. Orenstein: But was all of the the the the the backlog build here in the quarter tied to kind of commercial? Was it like strong renewal, just any additional color on why that CRPO growth actually accelerated even in an arguably very tough environment? Yeah, look, it was a good quarter.

Gregory D. Orenstein: And also just the mix that we had, which we always highlight can impact, you know, RPO, you know, came into play. You know, we talked about the commercial side. You know, we had three commercials. I know we frequently get questions about, you know, commercial saturation.

Speaker Change: I'm going to say I love to just get your thoughts just about the services business right now I think strategically we've talked about in the past how it might be nice to maybe worked with more so.

Gregory D. Orenstein: We had three customers that each expanded with us over 40% from an ACV perspective, just solely expanding their commercial usage of us this quarter. And so we still see plenty of opportunity on the commercial side. You know, the other thing with mixed Brent shows a little bit of the enterprise customers, again, coming back to buy, you know, as the events of last year, the liquidity crisis get further and further in the rearview mirror. So that's another thing that I'd highlight.

Gregory D. Orenstein: And I guess finally, just to echo peers' earlier comments, when we talk about commercial, you know, and again, people talk about commercial lending, we have the historic workflow, commercial lending business that, you know, we started from, but as we think about commercial, and as you guys think about commercial, we really would, you know, urge you or encourage you to think about it more broadly, with all of the other things that we're bringing to those commercial customers, And so as we look at that commercial customer base, again, we view it as a tremendous asset. And we think there's a lot of runway there for it. A lot of cross-sell, for sure. Very clear. Thank you. Thanks, Brent.

Speaker Change: <unk> partners, there to sort of sort of balance some of the work and it looks like some of that services mix is going down as just a percentage of total revenue. Maybe the question is where are we on that journey and how do you think about that mix longer term.

Speaker Change: Yes, I think that journeys just continues as is.

Speaker Change: Is I think us as we've talked about pretty consistently wanting to push services as much as we can to our Si partners continues to be the strategy.

Speaker Change: And you may see some lumpiness from time to time based on project not.

Speaker Change: I'm not going to.

Speaker Change: Our partner because maybe they wanted us to do it or going to a partner.

Speaker Change: Ultimately, we think that's a fairly steady state business.

Speaker Change: And it provides a lot of value for our customers, whether it's us directly implementing it and supporting the customers are working with our Si partners and again, that's how our folks here really.

Speaker Change: Learn more and more about the product and get more and more feedback from our customers about the product, which then goes right back into our R&D organization.

Speaker Change: It helps drive the continued innovation.

Speaker Change: I, just wanted to emphasize or add to that.

Speaker Change: Projects go better with Encino asked people on it.

Speaker Change: So we always emphasize regardless of the size of the bank even size involved that encino put some people on the project.

Speaker Change: So.

Speaker Change: Just because of the.

Speaker Change: Closest to the product people they come home on weekends, they come out on Friday. They go talk to product to them. Our center was built.

Speaker Change: And so you don't see the current percentage of revenue will probably continue.

Speaker Change: We don't deemphasize services, but we've tried to keep a nice balance to make sure our customer sat stays up we get the product feedback.

Speaker Change #100: That makes a lot of sense. Thanks, guys.

Doug: Thanks, Doug.

Speaker Change #102: Thank you.

Operator: Thank you. One moment for questions. Our next question comes from Alex Sklar with Raymond James. You may proceed. Great, thank you, Pierre. Great to hear about the record first quarter bookings. I want to dig into your comments in particular on US tier one and enterprise activity. I think you said it kind of can't start coming back.

Speaker Change #103: One moment for questions.

Operator: What do you see from that segment in the quarter? And how can we think about that segment contributing to bookings this year relative to its current mix of your business today? What I'm seeing is the same excitement, obviously, there are bigger staffs and a bit more sophistication on the IT side, but the same excitement with the same questions around the usage of AI and data. Remember, if you look at the critical mass of data by banks, you could say that J.B. Morgan Chase and maybe Wells Fargo have got critical mass.

Speaker Change #103: Our next question comes from Terry Tillman with Securities You May proceed.

Pierre Naude: But the rest of them don't have enough of a loan book to actually have a representative picture of all the areas and states in the U.S. With our data lake, and the products we're building on, and the way we actually anonymize and take these data into a big data lake, and then provide them with much deeper insights into the activities of commercial lending, as well as automate the review processes. You know, we all love to think about commercial loan origination. Most of the work actually consists of quarterly and six-monthly and annual reviews of existing loans and making sure the book is priced as well as collateralized and covenanted the right way.

Terrell Frederick Tillman: Yes, thanks for taking my questions here, Greg Harrison.

Pierre Naude: So there's a massive back office operation happening without loan origination at all. And that's where the opportunity to drive this automation comes in, and that's where RDC or its data corporations' partnership with us is so helpful. And then you pair that with the generative AI tools we're putting together in there, and it's going to literally remove chunks of processes that we've built over 12 years into the workflow. And that's the interesting part here is that we can now take a broad footprint of what we laid out for a bank because we know exactly what they do.

Terrell Frederick Tillman: Maybe the first question I remember on prior calls I would attempt to do local language. When you would have an international win so whether its French.

Terrell Frederick Tillman: Or Dutch or I think maybe one time in all New Zealand.

Pierre Naude: We can automate some of this and drive a lot more efficiently in a lower cost operation. And we will share in that efficiency as they pay us for these products. Okay, great. Yeah, I know RDC was a big part of the Insight keynote this year, so it's good to hear it in that color.

Speaker Change #105: You talked about the enterprise business being strong in the U S community banks, and just generally youre seeing that pick up in the U S. It seemed like international revenue was strong at 34% year over year growth, but how was it in terms of new business with new logos and door expansion sales with international customers.

Speaker Change #105: And then I had a follow up.

Speaker Change #105: Yes.

Speaker Change #105: Yes.

Speaker Change #106: You can make an English accent.

Speaker Change #105: Yeah.

Speaker Change #105: We had again we.

Speaker Change #107: Greg UK institution.

Speaker Change #107: That signed up for us that we're proud of but I would remind you that the international business is more of an enterprise business. So it's lumpy. The pipe is healthy we feel good about that.

Speaker Change #107: Plus I'll remind all Americans on the call that Canada as North America. So we've got Canada, the UK Ireland.

Speaker Change #107: I would say, we're very excited about Spain.

Speaker Change #107: We've got a nice operation in Spain, going and realized we've got Spanish banks outside of Spain as customers and what we're beginning to see since we put a focus on Spain.

Speaker Change #107: The Nordics and.

Around the Netherlands, and Belgium over Benelux.

Speaker Change #107: We are seeing increasingly demand in those regions, but specifically, Spain. We're very excited about Spain is also the entry point for us into Latin America.

Speaker Change #108: Oh boy those are very large Spanish banks.

Speaker Change #108: Once platforms to do global business with and so that's an exciting development.

Speaker Change #108: And I should also mention that Japan looks very healthy theres, some very exciting developments.

Speaker Change #108: As you can imagine it's a slow moving.

Speaker Change #108: Market as we get more traction and get more.

Speaker Change #108: References, but we had.

Speaker Change #108: Two different institutions from Japan coming out to insight.

Speaker Change #108: Meetings for them in general.

Speaker Change #108: And just exciting development because of the size and the breadth of what they want to do with us.

Speaker Change #108: And Salesforce Ultra has a big presence in Japan. So that's also helpful for us so I feel good about the natural business, but I want to comment in this short term because of the addition of Dr trucks, and the Lego and the emphasis on going deeper into the credit Union space, and adding sales and marketing there.

Speaker Change #108: They see that the U S accelerated growth a little bit.

Speaker Change #108: And then the international will catch up again that does not diminish the size of the opportunity internationally. It just say over time as we invest because we always felt building program into regional and then we grow it up okay.

Speaker Change #108: You might see that phenomenon a little bit.

Speaker Change #109: Got it well maybe I'll just go ahead.

Speaker Change #110: Give a little bit of Japanese can each of our Ohio designers.

Speaker Change #109: Sure.

So the second question and then ill stop for everybody's sake is on the Nic side.

Speaker Change #111: I think 39% of platform customers, who are using at least one of our solutions at the end of last quarter I assume that maybe that ticks up a little bit just anything Greg could share on that and then secondly look it seemed like after you launched auto spreading you had a lot of good early wins.

Speaker Change #112: I didn't hear a lot about new auto spreading deals that maybe you hadn't but it does seem like it's a really great efficiency play. So is there still more in the tank so to speak in terms of getting more customers to subscribe to that thank you.

Speaker Change #112: Yes.

Speaker Change #113: We do we do see a great interest there.

Speaker Change #114: If anybody was at insight will remember I talked about data consumption and the excitement with AI around there today a lot of that technology is based on OCR technologies.

Speaker Change #114: And in the future to grow based on AI with vision capabilities, which is going to give you a $5 nine accuracy percentage and so I think that whole autos spreading document in gestation.

Speaker Change #114: This is going to trains tremendously over the next six to 18 months okay.

Speaker Change #114: And we have the tech we have the people building it.

Speaker Change #114: Personal demos on this stuff.

Speaker Change #114: So there is great excitement around how that continues into and value prop is playing out.

Terrell Frederick Tillman: That's going to accelerate that product again, correct anything to add yes, Terry you can assume again, it's just.

Speaker Change #115: From a quarter ago that there would have been a small tick up in that percentage.

Speaker Change #115: The other thing just to getting back to the UK accident.

Speaker Change #115: Is that that lender that we've announced.

Speaker Change #115: It did purchase auto spreading.

Speaker Change #115: As well and so we didn't highlight it but I think more and more again as we bring these these products to market there'll be packaged.

Speaker Change #115: And ultimately again this is about a platform and.

Speaker Change #115: And all of the things that we can do for a bank on a single platform and so the lines may get blurred a little bit over time, as we again continue to expand broader and broader and deeper and deeper in our financial institution.

Speaker Change #116: Okay. Thank you.

Speaker Change #117: Thanks Terry.

Speaker Change #117: Sure.

Speaker Change #118: Thank you one moment for questions.

Speaker Change #119: Our next question comes from James Fawcett with Morgan Stanley You May proceed.

Pierre Naude: One more for you, Pierre, or Paul's on, I don't know if he's taking part in the Q&A, but can you just talk about the launch of SimpleNexus, the front end, the omnichannel capabilities, and maybe I'll just lump in some of the indirect auto functionalities that you talked about in response to Brent's question? What does that mean for the retail lending segment? I know Greg called out that's one of the areas you're going to spend more on in the back half of the year. So what's changed in your mind on consumer lending? Thanks.

Michael: Hi, Brian, It's Michael and Fine town for James Thanks for taking my question really interesting use cases on the banking adviser from peer Greg I was curious I think you previously mentioned that you werent expecting any revenue contribution from banking adviser in FY 'twenty five is that still the right way to think about it despite the product velocity and customer excitement.

Pierre Naude: So let's talk about the consumer facing side of this. Okay. What if American Airlines changed their whole booking operations and issuing tickets, etc., but you still had to make a phone call?

Pierre Naude: You know, years ago, I had to fill out the old stuff. It didn't help you much; it helped them in the middle back office. For us, putting up probably the most sophisticated, elegant front end solution where consumers can now do the stuff and go self-serve. It removes the burden from the bank. It gives them a modern platform.

Pierre Naude: It drives self-service to an extent not known in banking today, okay? So now, all of a sudden, people start believing that all that hard work we did for the middle back office, if you plug that front end in, it drives that consumer adoption and self-service they were always coveting. And that's the difference that this front end is making. It is the final piece of the puzzle, but we never wanted to do it until we've got the middle back office clean. Otherwise, you've got this cool front end, and you wait three days for an answer, okay?

Pierre Naude: We are moving to a world where five years from now... I believe consumer and small business banking at the low end should be mostly driven by self-service and intuitive tools that drive intelligence behind the scenes to advise and help consumers to be totally self-service. And it should be so simple, just like your iPhone comes in a box, you don't get a manual, you don't go to a training course. The same is going to happen.

Pierre Naude: We're going to take banking to that same level of efficiency and automation. The Allegra one is just to fill a hole in indirect lending because that's what the market space wants. And if they get this end-to-end solution that can do that as well, they can literally rip out their current disparate systems. They've got between 10 and 15 systems doing all the stuff we're doing. We can go in with a single platform, an elegant front end, totally different self-service. You walk in, you come halfway through your application, walk into the branch, and everything is right there. The branch first will pick you up, say, yes, where you left off; I'll finish it for you.

Pierre Naude: So lots of excitement around that, and if you hear the feedback we get from some of our largest customers around the mortgage experience, where people literally write them letters to say, I went to take the dog for a walk last night and applied for a mortgage on a very complex product and solution. That's the kind of elegance we want to drive into the market. All right. Thanks for that call up here. Thank you, Alec.

Speaker Change #119: You guys are seeing or do you think we can see some uplift this year.

Speaker Change #121: Yeah, it's still not part of our plan Michael.

Speaker Change #121: And again, I think getting back to two.

Speaker Change #122: Thank you your advisor same with Doc Fox, we highlighted what we brought onto.

Speaker Change #122: And seen only purchase did again our focus this year is on making sure we integrate that and really make it fully part of the single platform versus having a separate products. So nothing has changed in.

Speaker Change #122: Either one of those cases at this point in time.

Got it that's helpful. Maybe just a high level strategic question for you and a follow up on the earlier question, but obviously, there's been some developments just in terms of Basel III I'm curious it seems like well probably get some form of resolution towards the end of this year, but it seems like just in terms of easing of capital requirements more broadly it could.

Speaker Change #122: B a potential uplift just in terms of tax spend more broadly.

Speaker Change #122: But just any higher level conversations that youre, having with either current or prospective customers on that front would be helpful. Thanks.

Speaker Change #123: I think the banks are in a wait and see.

Speaker Change #123: Mode on that.

Speaker Change #123: There clearly is an appetite in some pockets for more banking mergers.

Speaker Change #123: And I think there is a common assumption under the current administration that will be very difficult.

Speaker Change #123: So this is all of that waiting in the wings for the election for the administration foreseeing what's.

Speaker Change #123: What's happening with the FDIC.

Speaker Change #123: So I think.

Speaker Change #123: That's one element, where the bankers are sitting waiting in a year like this year to see what's going to play out but apart from that you know.

Speaker Change #123: When youre inefficient youre inefficient.

Speaker Change #123: Behind during your tech spend Youre right, the new tech spend and what I'm hearing is that people don't record the same ways in 'twenty two.

Speaker Change #123: 2910, 11, and 12, when we started the company we literally could feel the pent up demand of people, who didn't spent and then realize they fell behind and the people to keep up with tech the other winning banks and they attract the best people.

Speaker Change #123: I'm seeing a more of a.

Speaker Change #123: Careful strategic move forward to actually not fall behind.

Speaker Change #124: That's helpful. Thanks.

Speaker Change #125: Thank you thanks, Mike.

Operator: One moment for questions. Our next question comes from Saket Kalia with Barclays. You may proceed. Okay, great. Hey, guys, thanks for taking my questions here. Pierre, maybe for you just, hey, Pierre, hey, Greg.

Speaker Change #126: Thank you one moment for questions.

Speaker Change #127: Our next.

Speaker Change #128: It comes from Adam <unk> with Bank of America, You May proceed.

Adam: Hey, Thanks for taking my question just to clarify those are all it sounds like customer activity improved in Q1.

Adam: Or would you say for the mortgage business in isolation that that ticked down.

Speaker Change #130: Ultimately way and fund the choice to maintain the full year guide.

Speaker Change #131: No I wouldn't say it ticked down again, we signed 15, new logos, including some competitive takeaways.

Speaker Change #131: And again that business still grew.

Speaker Change #131: Almost double digits again in this difficult market and so again I think that positions us incredibly well as we get through this year and beyond.

Speaker Change #131: Ultimately again, we gave guidance a short time ago right at the end of March.

Speaker Change #131: And it may just be a hangover from last year, but again, we're sensitive on the churn side.

Speaker Change #131: Like I said it seems like some of the <unk> closing has settled down a little bit, but we can't say that it's over and it's hard to predict M&A.

Speaker Change #131: Like I said I think we would hope to be on the winning side to the extent that there is any M&A in the AMD space, but we.

Speaker Change #131: Just don't know and so again, just trying to be prudent.

Speaker Change #131: And again you saw the over performance on the bottom line and what we did with that and as the year progresses.

Speaker Change #131: We're able to update our guidance, we will based on the information. We've got next time, we speak to you.

Speaker Change #132: That's helpful context.

Speaker Change #133: And then as a quick follow up.

Speaker Change #134: Are you able to break out any inorganic contribution to IPO the IPO billings from Doc Fox at all thank you.

Speaker Change #135: Yes no.

Speaker Change #136: Yes, dark box and I'll say the stock Fox just like our mortgage business and also the indirect lending business we have.

Speaker Change #136: Just note that those things are billed on a monthly basis.

Speaker Change #136: And so again from a deferred perspective, youre not going to you're not going to necessarily see it sitting there as.

Speaker Change #136: As you think about billings youre not going to see it sitting there as well.

Speaker Change #136: And so we haven't broken those out again those are pretty small pieces of the of the overall <unk> bucket.

Speaker Change #136: Yeah.

Speaker Change #137: Awesome Thats helpful. Thank you.

Adam: Thanks, Adam.

Speaker Change #138: Thank you one moment for questions.

Operator: Pierre, maybe, maybe for you, I'd like to just double-click a little bit on just the consumer business a little bit, you know, to your earlier point, right, like, you're kind of building a whole sort of end-to-end system there for consumers. Maybe we could just talk about it from a demand perspective, qualitatively, how do you feel about the pipeline for consumer lending this year? And, as that tool set has matured, how are you kind of looking at competitive win rates right now? Of course, all, all, and totally?

Speaker Change #139: Our next question comes from Charles Nabhan with Stephens You May proceed.

Pierre Naude: Yes. So I would remind you that consumer finance includes indirect lending, mortgage, consumer finance unsecured, and secured non-real estate.

Charles Joseph Nabhan: Good afternoon, and thank you for taking my question had a high level strategic question and a quick follow up on.

Pierre Naude: And then when you get to real estate, it's mortgage plus, HELOT, etc. Okay. So it's a fairly big bundle.

Charles Joseph Nabhan: On the model.

Charles Joseph Nabhan: The high level on the strategic question one of the themes coming out of insight was the modernization of your API and the.

Charles Joseph Nabhan: The growth in your partner ecosystem. So I was hoping you could touch on that a little bit in terms of.

Charles Joseph Nabhan: The investments you've made in the strategic importance of that channel.

Pierre Naude: And anyone who's been to Insight, It's actually one of the things I noticed is we've got all these consumer products in different booths, and you walk around, and it's actually one big consumer platform, okay? What we are seeing is that banks have done the commercial piece with us. And now the single platform story is responding. They're beginning to see that not only do we do the investment. All right.

Charles Joseph Nabhan: Yes.

Speaker Change #141: So depending on the market segment, you're in some banks like the one front end some banks want to vote, maybe their own jove AI models interfacing to Encino. Some banks has got big data legs, they want to share with us and we have to integrate with it.

Pierre Naude: And I'll point out that $15 billion asset bank that grew ACV7X by signing up with us, even without having a commercial on there yet. I'm seeing demand coming. By the way, it's just like the iPhone. On day one, you loved your BlackBerry. I've never seen you using a BlackBerry, but I'm 100% sure you had one.

Pierre Naude: Okay. And so it takes people a little bit to say, okay, it's real now. And here's what you have to realize. Banking cannot afford the personal services for products that are unprofitable.

Pierre Naude: That's the simple math in banks today. I meet with many, many CEOs of banks. And that's the most common theme, apart from efficiency, is that we cannot keep on spending time and money with people on products that are unprofitable. So, the automation drive and the efficiency drive are going to do that. So, by the way, the pipeline is healthy, we feel good about it, the customer reference is healthy, and the existing projects where we're installing consumers are healthy. So, I feel overall that as we have more success, that demand will actually go up. Got it. Got it.

Gregory D. Orenstein: That makes a ton of sense. Greg, maybe for my follow-up for you, I'd love to just get your thoughts on the services business right now. You know, strategically, we've talked about in the past how it might be nice to maybe work with more, you know, SI partners there to sort of balance some of the work. And it looks like some of that services mix is going down as just a percentage of total revenue. Maybe the question is, where are we on that journey? And how do you think about that mix in the longer term?

Speaker Change #141: So there's multiple reasons for people to want to integrate with encino as the central platform.

Speaker Change #141: A few years ago, we decided that we're going to have this API strategy and then we're going to eat our own dog food, which means.

Gregory D. Orenstein: Saket, I think, you know, that journey just continues as, as is. I think, us, as we've talked about pretty consistently, wanting to push services as much as we can to our SI partners continues to be the strategy. And, you know, you may see some lumpiness from time to time based on, you know, projects not going to a partner because maybe they wanted us to do it or go to a partner.

Gregory D. Orenstein: But, you know, ultimately, we think that's a fairly steady-state business, and it provides a lot of value for our customers. Whether it's us directly implementing it, supporting the customers, or working with our SI partners. And again, that's how our folks here really learn more and more about the product and get more and more feedback from our customers about the product, which then goes right back into our R&D organization and helps drive continued innovation. Projects go better when Ncino has people on them. So we always emphasize, regardless of the size of the bank, even SI's involved, that Ncino puts some people in the process. So, just because of the...

Gregory D. Orenstein: Closest to the product people, they come home on weekends, they come home on Fridays, they go talk to the product, they understand how it was built. And so you'll see the current percentage of revenue will probably continue. We don't de-emphasize services, but we try to keep a nice balance to make sure customer support stays up, and we get product feedback. That makes a lot of sense. Thanks, guys. Thanks, Sa

Speaker Change #141: The same API as reuse for our consumer front and our commercial front ends.

Speaker Change #141: It will be exactly the same Apis that we make available to the market.

Speaker Change #141: Moving to Esi's too both through our products.

Speaker Change #141: For instance, in the case of regenerative AI now we.

Speaker Change #141: We will open up that modeling so that <unk> can work with our customers and add more skills.

Speaker Change #141: Our benefit through the banks benefit to the ESI benefit so that this whole ecosystem can proliferate throughout the bank and be everywhere.

Speaker Change #141: That is the whole goal of a platform play that's the whole goal of.

Speaker Change #141: Making available the intelligence and the assets at sitting under the platform and I think that's good for them. So we feel the direction of open Apis, which by the way you could monetize.

Speaker Change #141: Is a good thing for the company as well as our customers.

Speaker Change #142: Got it that's helpful and just as a quick follow up on the model you had highlighted some factors that led to the outperformance on.

Speaker Change #143: On operating income, including bad debt and slower hiring could you speak to the degree to which those factors are built into the second quarter guide as well as any variables, we could potentially think of us as we move through the year in terms of in terms of expenses.

Speaker Change #144: Yes Charles.

Charles Joseph Nabhan: That was taken into consideration as we looked at Q2 and the rest of the year.

Speaker Change #145: All of those things we wanted to highlight to you guys appreciated again the over performance what drove it.

Speaker Change #145: And again, we elaborate I elaborated a little bit further around.

Speaker Change #145: Would impact specifically Q2, but as you look at our guidance and the updated bottom line guidance that we provided that takes those factors into account.

Speaker Change #145: Got it thank you.

Charles Joseph Nabhan: Thanks Charles.

Speaker Change #146: Thank you.

Operator: Thank you. One moment for questions. Our next question comes from Terry Tillman. With two insecurities, he may proceed.

Speaker Change #147: One moment for questions.

Speaker Change #148: Our next question comes from Robert <unk> with Macquarie Capital You May proceed.

Operator: Yeah, thanks for taking my questions, Pierre, Greg, and Harrison. Maybe the first question I remember on prior calls is to attempt to do a local language when you have an international win. So whether it's French, or Dutch, or I think maybe one time in New Zealand.

Robert: Yes, hi, Thank you Pierre and Greg Harrison just one quick question because I know, we're running out of time on it wouldn't be a quarter if I didn't ask about.

Speaker Change #148: Yes.

Speaker Change #150: The pricing shift.

Speaker Change #150: And the momentum that you are getting.

Pierre Naude: You talked about the enterprise business being strong in US community banks and, just generally, you're seeing that pickup in the US. It seemed like international revenue was strong at 34% year over year growth. But how was it in terms of new business with new logos and or expansion sales with international customers? And then I had a follow-up. Yes. Yeah, we had, you can do an English accent.

Speaker Change #150: Given it seems like.

It's been pretty positive reception.

Speaker Change #151: For a few quarters now.

Speaker Change #152: On the consumer side is there any change to your timetable would you potentially.

Speaker Change #151: Accelerate.

Speaker Change #151: That shifts.

Speaker Change #151: Away from seats and towards hybrid if you will commence.

Speaker Change #153: Commercial loan.

Speaker Change #154: We have some deals you already do on a platform basis.

Speaker Change #154: That's why we're testing the market so actually sales leadership as the capability to apply that new model.

Speaker Change #154: In the meantime, we are working with a consulting firm to really package and price the correct way. So we do it once they're rolled out and don't have to.

Speaker Change #155: Pull it back like my sonar system updated me and I didn't like it so.

Speaker Change #155: So what would we have to do is to be very thoughtful because look by asset size and by solution.

Speaker Change #155: Right.

Speaker Change #155: Not only do we have to.

Speaker Change #155: Optimized pricing, we have to make sure there's expansion capabilities, we have to make sure it's competitive in the market and we have to make sure. It makes sense to the customer and how they view pricing in the future.

Speaker Change #155: And to bring all those elements together I'm, rather going to take the next two months to get this finalized and get it right and then.

Speaker Change #155: We will make it very clear on these calls with you all that how that will impact your modeling.

Speaker Change #156: And how is the company's future will look based upon that.

Speaker Change #156: Now I will say I think <unk> know, we are working with third party to help drive.

Speaker Change #156: And as you get into it it's complex, it's much different than just changing our pricing SKU.

Speaker Change #156: On a price list.

Speaker Change #156: So I think we're on track with that I think there is good momentum internally.

Speaker Change #157: To leverage on what we did what we have done a mortgage and consumers. We've previously talked about.

Speaker Change #157: And then again I think it also gives us an opportunity to look at the business a little bit differently in terms of bringing in light of the breadth and depth of the product, bringing different bundles together and pricing them together to really make buying encino much easier.

Speaker Change #157: And much more straightforward.

Peter: And that's something that I think our customers will appreciate as well as our sales folks. So I think we're excited about it but to Peter's point, we're going to be very methodical about it make sure we do it right.

Peter: Cross every T dot every I and I think we're on track.

Peter: In terms of our internal plan to to execute on that.

Very helpful. Thank you very much Greg.

Speaker Change #158: Thank you.

Okay.

Speaker Change #159: And as a reminder to ask a question. Please press star one on your telephone. Our next question comes from Chris Kennedy with William Blair You May proceed.

Cristopher David Kennedy: Good afternoon. Thanks for taking the question just a quick one any way to think about free cash flow for the rest of the year I know, there's some seasonality here. Thank you.

Speaker Change #161: Yeah. Thanks, Chris We don't we don't guide to free cash flow.

Speaker Change #161: We did note that Q1 is historically, our strongest cash flow quarter.

Speaker Change #162: I don't see us tracking any differently in terms of how we have historically in terms of from Q1 throughout the year to Q4.

Speaker Change #162: But yes, otherwise really nothing nothing to note.

Chris: Again, obviously, we have been increasing our cash and ultimately that's been allowing us to do things like make these tuck in acquisitions that really can help drive growth and value.

Speaker Change #164: Great. Thanks for taking the question.

Chris: Thanks, Chris.

Speaker Change #165: Thank you I would now like to turn the call back over to <unk> for any closing remarks.

Speaker Change #166: Thank you operator, and thank you all for attending today.

Speaker Change #167: We said that customers under the harder than seen those mission. So the opportunity to spend three days with customers and partners at the inside earlier this months fuels my excitement about the road ahead.

Speaker Change #167: So much from our customers the shaping our product roadmap and drive our technology innovation.

Speaker Change #167: We are grateful for the trust in us and the opportunity to continue shaping the financial services industry.

Speaker Change #167: And as always I appreciate the hard work and loyalty of the global Encino team.

After another quarter of solid execution I am excited for your continued efforts as we work together to accelerate the digital transfusion of financial institutions around the world.

Speaker Change #167: You all structure later.

Speaker Change #168: Thank you. This concludes the conference. Thank you for your participation you may now disconnect.

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Pierre Naude: We had a great UK institution that signed up for us that we're proud of. But I would remind you that the international business is more of an enterprise business. So it's lumpy.

Speaker Change #169: Good day, and thank you for standing by welcome to the Encino first.

Speaker Change #170: Quarter of fiscal year 2025 financial results conference call. At this time all participants are in a listen only mode. Please be advised that today's conference is being recorded after the speaker's presentation. There will be a question and answer session to ask a question. Please press star one on your telephone and wait for your name to be announced.

Pierre Naude: You know, the pipe is healthy, and we feel good about that. Plus, I'll remind all Americans on the call that Canada is not America. So we've got Canada, you've got the UK, and Ireland.

Speaker Change #170: Draw. Your question. Please press Star one again I would now like to hand, the conference over to your Speaker today, Harrison Masters director of Investor Relations.

Pierre Naude: I would say we're very excited about Spain. We've got a nice operation in Spain going, and we realize we've got Spanish banks outside of Spain as customers. And what we're beginning to see since we put a focus on Spain, the Nordics, and around the Netherlands and Belgium, or the Benelux. We are seeing increasing demand in those regions, but specifically Spain, we're very excited about. Spain is also the entry point for us into Latin America, with those very large Spanish banks, wants platforms to do global business with. And so that's an exciting development. And I should also mention that Japan looks very healthy.

Pierre Naude: There are some very exciting developments. As you can imagine, it's a slow moving market as we get more traction and get more references. But we had.

Speaker Change #171: Good afternoon, and welcome to <unk> first quarter fiscal 2025 earnings call with me on today's call are <unk> de <unk>, Chairman and Chief Executive Officer, and Greg Ornithine, <unk> Chief Financial Officer. During the course of this conference call, we will make forward looking statements.

Pierre Naude: Two different institutions from Japan are coming to Insight. I had meetings with them in general. And just exciting developments because of the size and the breadth of what they want to do with us. And Salesforce also has a big presence in Japan, so that's also helpful for us. So I feel good about the international business, but I want to comment. In the short term, because of the addition of Doc Fox and Allegro and the emphasis on going deeper into the current union space and adding sales and marketing there, you may see that the U.S. accelerates growth a little bit, and then the international business will catch up again.

Speaker Change #172: <unk> trends strategies and the anticipated performance of our business.

Speaker Change #172: 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 and see no disclaimer.

Speaker Change #172: Any obligation to update or revise any forward looking statements.

Speaker Change #172: Further on today's call. We will also discuss certain non-GAAP metrics that we believe aid in the understanding of our financial results I.

Speaker Change #172: 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.

Speaker Change #172: As well as the earnings presentation on our Investor Relations website at Investor that Encino Dot com.

Pierre Naude: That does not diminish the size or the opportunity internationally. It just says over time as we invest, because when we start building for the community, then we grow it up, okay? You may see that phenomenon a little bit. Got it. Well, maybe I'll just go ahead and give a little bit of Japanese. Konnichiwa, or Ohio gazimus.

Speaker Change #173: With that I will now turn the call over to Pierre.

Terrell Frederick Tillman: But so the second question, and then I'll stop for everybody's sake, is on the Nick side. I think 39% of platform customers were using at least one of the solutions at the end of last quarter. I assume that maybe that picks up a little bit. Just anything Greg could share on that. And then, secondly, look, it seemed like after you launched auto spreading, you had a lot of good early wins.

Pierre: Thank you Allison and thank you all for joining US today, we're very pleased with the start to the year.

Pierre Naude: You know, and I didn't hear a lot about the new auto-distribution deals, but maybe you had them, but it does seem like it's a really great efficiency play. So is there still more in the tank, so to speak, in terms of getting more customers to subscribe to that? Thank you. Yes, we do, and we see a great interest there. If anybody who was at Insight will remember I talked about data consumption and the excitement with AI around that. Today, a lot of that technology is based on OCR technologies.

Pierre: Both on the sales momentum from Q4 with gross sales in the first quarter exceeding our plan and establishing a company record for gross sales in the first quarter.

Pierre: We saw strength across the business with existing customers expanding their adoption of our platform.

Pierre: Most notably in the U S enterprise and community and regional markets.

Pierre Naude: And the future is going to be based on AI with vision capabilities, which is going to give you a 5-9 accuracy rate. And so I think that whole document interstation business is going to change tremendously over the next six to 18 months. Okay. And we have the tech, we have the people building it, and I get personal demos of this stuff. So there's great excitement around how that continuous end-to-end value proposition is playing out. And I think that's going to accelerate that product again. Greg, anything to add?

Gregory D. Orenstein: And so, you know, the lines may get blurred a little bit over time as we again continue to expand, you know, broader and broader and deeper and deeper into a financial institution. Okay, thank you. Thank you. Thank you, Terry.

Pierre: Last quarter.

Pierre: Noted that we expected net sales for fiscal 'twenty five to increase approximately 50% over last year.

Operator: Thank you. One moment for questions. Our next question comes from James Faucette with Morgan Stanley. You may proceed. Everyone, it's Michael Infante on behalf of James.

Pierre: Our strong Q1 performance certainly increases our confidence in achieving that goal.

Operator: Thanks for taking our question. Really interesting use cases on the banking advisor front. Pierre, Greg, I was curious, I think you previously mentioned that you weren't expecting any revenue contribution from banking advisor in FY25. Is that still the right way to think about it, despite the product velocity and customer excitement that you guys are seeing? Or do you think we can see some uplift this year?

Gregory D. Orenstein: Yeah, it's still not part of our plan, Michael. You know, and again, I think getting back to the banking advisors, same with DocFox, you know, we highlighted what we brought to Ncino, we purchased it again, and the focus this year is on making sure we integrate that and really make it fully part of the single platform versus having a separate product. So nothing's changed in either one of those cases at this point in time. OK, got it. That's helpful.

Pierre: At yearend, we appointed the stabilization of interest rates as key to the improving tone of customer conversations and more normalized buying behavior.

Pierre Naude: Maybe Pierre, just a high-level strategic question for you and a follow-up on the earlier question, but obviously, there's been some developments just in terms of Basel III's endgame. I'm curious, seems like we'll probably get some form of resolution towards the end of this year, but it seems like just in terms of easing capital requirements more broadly, there could be a potential uplift just in terms of tech spend more broadly, but just any higher-level conversations that you're having with either current or prospective customers on that front would be helpful.

Pierre: The December 2023 Federal Reserve open market Committee meeting provided stability that was missing in the U S market for almost two years.

Pierre: With more visibility into their own financial performance more and more financial institutions have been able to refocus on strategic initiatives to.

Pierre: To improve their operations create additional operating efficiencies provide better user experiences for their clients.

Speaker Change #174: <unk> improved our competitive positioning.

Speaker Change #174: This is translating to more technology spend.

Speaker Change #174: 72% of the executives report and an internal survey. This month responded that their it budgets have increased from last year with 44%, citing an increase of over 5%.

Speaker Change #174: While interest rate stability as being a positive for most of our business right.

Speaker Change #174: The rates being higher for longer have kept the mortgage market under pressure despite the.

Speaker Change #174: Difficult market conditions, our U S mortgage business continued to perform well.

Speaker Change #174: Adding 15, new logos and the gain exceeding internal quarterly gross sales targets with strength in both EFI and <unk> market segments.

Speaker Change #174: Second mortgage market over the past couple of years has reinforced the imperative for mortgage lenders to leverage technology to improve profitability.

Speaker Change #174: Provide a more enjoyable and efficient customer experience and attract the best talent. Our results again reflect our success in displacing competitors and cross selling into our banking installed base. We are currently in a waiting game for the first fed rate cut and the puts and takes of the demand equation do.

Pierre Naude: You know, I think the banks are in a wait and see mode. There clearly is an appetite in some pockets for more banking mergers, and I think there's a common assumption under the current administration that it'll be very difficult.

Pierre Naude: So there's all of that waiting in the wings for the election, for the administration, for seeing what's happening at the FDIC. So I think... That's one element where the bankers are sitting waiting for a year like this year to see what's going to play out. But apart from that, you know, when you're inefficient, you're inefficient. And if you're behind on your tax spend, you're behind on your tax spend. And what I'm hearing is that people don't want to be caught the same way as in 2009, 10, 11, and 12.

However, the level of difficulty in predicting how and when rate cuts will impact mortgage volumes.

Pierre Naude: When we started the company, we literally could feel the pent-up demand of people who didn't spend and then realized they had fallen behind. And the people who keep up with tech are the winning banks, and they attract the best people. So I'm seeing more of a careful strategic move forward to actually not fall behind. That's helpful. Thanks.

Speaker Change #174: That said, we are confident that our market, leading technology and our ongoing commitment to product innovation will continue to yield share gains.

Speaker Change #174: Obviously, there are nuances by market, but we see priorities generally aligned across all of the markets. We serve the liquidity crisis, a year ago and the ensuing difficult business cycle in province, some lasting lessons for our customers and prospects operational efficiency matters and quality.

Speaker Change #174: Digital experiences are table stakes for their clients.

Speaker Change #174: The only cloud native single platform that spans lending onboarding and account opening operations across business lines within the financial institution, we are uniquely positioned to bring efficiency and a modern digital experience to financial services.

Speaker Change #174: This was on full display for over 1600 attendees at insight our annual user conference held in Charlotte just two weeks ago.

Speaker Change #174: In responding to a registration survey more than 70% of attendees confirmed that improved efficiency was the number one priority for the institution in 2024.

Speaker Change #174: This aligns directly with our mission of bringing people processes and data together on a single customer centric platform.

Speaker Change #174: As the first steps towards digital transformation can begin anywhere within the financial institution.

Speaker Change #174: We've been focused on ensuring that all of our solutions our market leading.

Speaker Change #174: For example, in the first quarter and over $15 billion asset bank expanded their use of Encino from Treasury Onboarding.

Speaker Change #174: Includes small business and consumer lending as well as deposit account opening.

Speaker Change #174: We expanded ACB by nearly seven times within this account in Q1, even though they are not yet a customer of our flagship commercial lending solution.

Speaker Change #174: In April we announced a number of announcements to our consumer lending solution.

Speaker Change #174: Including the Omnichannel experience, we've discussed for the past few quarters.

Speaker Change #174: Insight was the GAA launch of Omnichannel, and we couldnt be more excited about the incredibly positive reaction and feedback from our customers for this product as we make the same truly mobile first point of sale experience already an important differentiator for our U S mortgage solution available across all of consumer lending.

Speaker Change #174: Rounding out our consumer lending enhancements of new capabilities for indirect auto lending made possible through the recent tuck in technology process of Allegra.

Speaker Change #174: In evaluating the boat farther by decision to sulfur indirect lending, we decided the most efficient way to accelerate development for the specialized vertical.

Speaker Change #174: Was to acquire the technology from a valued partner in the credit Union space through States financial group.

Speaker Change #174: You'll also recall, we discussed the acquisition of Dr. Fox on our last earnings call.

Speaker Change #174: This acquisition provides us with new Onboarding and account opening capabilities for small business and commercial banking.

Speaker Change #174: <unk> was the first opportunity for many of our customers to see how the solution Digitizes and streamlines, a traditionally high touch inefficient and time consuming process.

Speaker Change #174: The feedback has been tremendous including over 100, new sales and leads generated at insight.

Speaker Change #174: We continue working with early adopters on an integrated product initially targeted at the community and regional banking market in the U S.

Speaker Change #174: One mutual customer support Onboarding time purposes accounts being cut from two weeks to under an hour with dark trucks.

Speaker Change #174: The testing of the market, we have found solving the commercial onboarding platform for FY <unk> can yield around half of the ECB, we expect for commercial lending.

Speaker Change #174: We are incredibly excited about the opportunity for Doc trucks.

Speaker Change #174: Which will be referred to as the Encino commercial Onboarding and account opening solution and look forward to expanding this offering for U S enterprise customers later this year.

Speaker Change #174: Having laid the foundation with an integrated platform of best in class solutions. We are uniquely positioned to continue leading the digital transformation of financial services with automation data and intelligence.

Speaker Change #174: Our newest Nick offering that's exactly that continuous credit monitoring leverages, our product rich data companies AI Decisioning platform to automate what were previously manual loan review tests at the customer and portfolio level.

Speaker Change #174: Through this collaboration we are setting a new standard in how financial institutions manage credit risk.

Speaker Change #174: We were pleased to announce empty and then senior customer since 2016, as our first U S customer on continuous credit monitoring this.

Speaker Change #174: This solution will enable <unk> to detect more early warning signs and provide insights to <unk> employees to drive even more timely and tailored banking experiences for their clients.

Speaker Change #174: Just one example of our key partnerships extend and enhance our platform.

Speaker Change #174: And perhaps the most innovative development sounded insight where the banking advisory products.

Speaker Change #174: We demonstrated how we have product type generative AI to automate the creation of deal and credit memos to quickly interpret policies to chat with upload locate and filed documents and attend pdfs into data.

Speaker Change #174: Our customers are so excited by this breakthrough technology.

Speaker Change #175: <unk> got reminded by the fire Marshal for overcrowding of the inside banking adviser Booth.

Speaker Change #175: As a reminder.

Speaker Change #175: And sono firsthand to our customers Trust us, we let them on the journey of cloud adoption.

Joe: Joe is to install that same trust as their partner in the journey to adopt AI.

Joe: And seniors differentiator as the vendor in financial services, not only by our global reach and inability to serve institutions of all sizes, but by being home to the mission critical lending account opening and onboarding processes across a single platform for all of our finance.

Joe: Institutions products and services at.

Joe: <unk> roots are in the business process reengineering and with AI, we have the ability to drive intelligence and automation like never before.

Operator: Thank you. Thanks, Michael. Thank you. One moment for questions. Our next question comes from Adam Bergere with Bank of America. You may proceed. Hey, thanks for taking my question. Um, just to clarify, overall, it sounds like customer activity improved in Q1. But would you say, for the mortgage business in isolation, that that had ticked down? And that's ultimately what informed the choice to maintain the full-year guide? No, I wouldn't say it ticked down.

Joe: With that I'll turn the call over to Greg to take us through the financials.

Gregory D. Orenstein: Again, we signed 15 new logos, including some competitive takeaways. And again, that business still grew by almost double digits in this difficult market. And so again, I think that positions us incredibly well, you know, as we get through this year and beyond. But ultimately, we gave guidance a short time ago, right at the end of March. And, you know, it may just be a hangover from last year.

Greg: Thank you Pierre and thanks, everyone for joining us this afternoon to review our first quarter fiscal 2025 financial results.

Greg: Please note that all numbers referenced in my remarks, R&D non-GAAP basis, unless otherwise stated.

Greg: 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.

Gregory D. Orenstein: But again, we're sensitive on the churn side. Like I said, it seems like some of the IMBs closing have settled down a little bit, but we can't say that it's over. And, like I said, I think we would hope to be on the winning side to the extent that there is any M&A in the IMB space. But, you know, we just don't know.

Greg: We are very pleased with our first quarter financial results total revenues for the first quarter of fiscal 'twenty, five or $128 1 million, an increase of 13% year over year.

Gregory D. Orenstein: And so again, just trying to be prudent. And again, you saw the overperformance on the bottom line and what we did with that. And as the year progresses, you know, we're able to update our guidance, you know, we will. Based on the information we've got next time we speak to you. Awesome, that's helpful context. And as a quick follow-up, are you able to break out any inorganic contribution to RPO, CRPO, or billings from DocFox at all?

Gregory D. Orenstein: Yeah, no, you know, Doc Fox, and I'll say this Doc Fox, just like our mortgage business and also the indirect lending business we have. Just note that those things are built on a monthly basis. And so again, from a deferred perspective, you're not going to, you're not necessarily going to see it sitting there. If you think about billings, you're not going to see it sitting there as well.

Greg: Subscription revenues for the first quarter were $110 4 million, an increase of 13% year over year, representing 86% of total revenues.

Greg: As previously discussed revenue growth rates. This year are being impacted by the heightened churn we saw last year, particularly in the <unk> market.

Greg: Churn in the first quarter didn't moderate as expected and while we will continue to closely monitor the interest rate environment, our churn expectations for the rest of this year remain in line with the $25 million, we discussed for the full year.

Greg: Professional services revenues were $17 $7 million in the quarter growing 8% year over year.

Non U S revenues were $25 $8 million or 20% of total revenues in the first quarter up 34% year over year.

Greg: non-GAAP gross profit for the first quarter of fiscal 'twenty, five was $84 4 million, an increase of 14% year over year.

Greg: non-GAAP gross margin was 66% compared to 65% in the first quarter of fiscal 'twenty four.

Greg: Our subscription gross margins reflect approximately 70 basis points of benefit from improved unit economics under our agreement with Salesforce.

Greg: We expect continued subscription gross margin improvement in line with the 1% increase for fiscal 'twenty five we discussed last quarter as.

Greg: As we lap annual billing events for existing customers and have the opportunity to move more of them on to our new salesforce pricing.

Greg: non-GAAP operating income for the first quarter of fiscal 25 was $24 4 million compared with $10 9 million in the first quarter of fiscal 'twenty four.

Greg: Our non-GAAP operating margin for the first quarter was 19% compared with 10% in the first quarter of fiscal 'twenty four.

Greg: Our operating margin benefited from hiring being slightly behind plan in the quarter.

Greg: Favorable insurance renewals and improvement in bad debt expense, particularly in the <unk> space.

non-GAAP net income attributable to Encino for the first quarter of fiscal 25 was $22 million or <unk> 19 per diluted share compared to $8 million or <unk> <unk> per diluted share in the first quarter of fiscal 'twenty four.

Greg: Our remaining performance obligation or <unk> increased to $1.07 billion as of April 32024 up 17% over $914 million as of April 32023 with.

Greg: With $702 million in the less than 24 months category up 13% from $623 million as of April 32023.

Greg: We had another strong expansion quarter with contract extensions accompanying those deals so.

Greg: So we had healthy contract duration ads that accompanied the incremental ACB.

We ended the quarter with cash and cash equivalents of $134 8 million, including restricted cash.

Greg: Net cash provided by operating activities was $54 4 million compared to $31 3 million in the first quarter of fiscal 'twenty four.

Greg: Capital expenditures were 342000 in the quarter, resulting in free cash flow of $54 1 million for the first quarter of fiscal 'twenty five.

Greg: As a reminder, the first quarter is typically our seasonally strongest cash generation quarter.

Greg: You will note our statement of cash flow reflects investing activity net of acquired cash of $91 $2 million.

Greg: This reflects $19 9 million of all cash purchase consideration for Allegro and $74 3 million for Doc Fox, including approximately $2 million of purchase consideration that was recorded as post combination expense, which was excluded from our non-GAAP results.

Greg: With the addition of indirect lending functionality Allegro expands the market opportunity for our consumer lending product to a larger number of banks and credit unions, which we expect will further increase our competitiveness and consumer lending.

Greg: The revenue contribution expected this fiscal year from this technology is immaterial.

We borrowed $75 million on our revolving credit facility to finance, the Doc Fox acquisition, and subsequently repaid $20 million within the quarter we.

Greg: We plan to pay down the remaining $55 million of borrowed principal during the rest of this fiscal year as we continue to generate cash.

Greg: We used cash on hand to fund the acquisition of Allegro.

Greg: Turning to guidance for the second quarter, we expect total revenues of $130 5 million to $131 $5 million with subscription revenues of $112 5 million to $113 $5 million.

Greg: This guidance assumes year over year subscription revenues growth of 13% to 14%.

Greg: We're fully fiscal year 'twenty five we continue to expect total revenues of $538 5 million to 502.

Greg: $544 $5 million.

Greg: With subscription revenues of 463 million to $469 million.

Greg: This full year guidance assumes year over year subscription revenues growth of 13% to 15%.

Greg: non-GAAP operating income in the second quarter is expected to be approximately 17 million to $18 5 million.

Greg: And non-GAAP net income attributable to encino per share to be 12 to 13.

Greg: This is based upon a weighted average of approximately 117 million diluted shares outstanding.

Greg: Insight is expected to add approximately $2 million of incremental sales and marketing expense in the second quarter on a sequential basis.

Greg: Additionally, annual merit increases affected in April plus salaries and wages of people onboarding with the acquisitions will contribute to a higher quarterly operating expense run rate.

Greg: Also in light of the incredible customer demand, we saw at insight for our expanded product capabilities. We plan to reinvest some of the Q1 bottom line over performance in sales and marketing to drive even greater adoption of our newer solutions and to more aggressively pursue the consumer lending opportunity in the credit Union market.

Greg: Okay.

Greg: That said, we are increasing our non-GAAP operating income outlook for the full year and now expect non-GAAP operating income for fiscal 'twenty five to be $86 million to $89 million.

Full fiscal year 'twenty five non-GAAP net income attributable to <unk> per share is expected to be 65 to 68.

Greg: Based upon a weighted average of approximately $117 million diluted shares outstanding.

Speaker Change #178: With that operator, we will open the line for questions.

Speaker Change #179: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, one moment for questions.

Gregory D. Orenstein: And so we haven't broken those out. Again, those are pretty small pieces of the overall RPO bucket. Awesome, so far. Thank you. Thanks, Adam.

Adam Charles Bergere: Our first question comes from Adam <unk> with Goldman Sachs. You May proceed.

Operator: Thank you. One moment for questions. Our next question comes from Charles Nabhan with Stevens. You may proceed.

Adam Charles Bergere: Great. Thanks, so much for taking the questions up here I. Appreciate the comments you gave around inside would love for you to just take a little bit more into what are some of the key things you learned from customer conversations what are they.

Operator: Good afternoon, and thank you for taking my question. I had a high level strategic question and a quick follow up on, on the model. On the high level, on the strategic question, one of the themes coming out of Insight was the modernization of your APIs and your, the growth in your partner ecosystem. So I was hoping you could touch on that a little bit, in terms of the investments you've made and the strategic importance of that channel. Yes.

Speaker Change #180: Are you asking for around themes like AI and innovation.

Speaker Change #181: Any incremental color you can give around the 100, new sales leads generated there what products or people most focused on really appreciate it.

Pierre Naude: You know, depending on the market segment you're in, some banks like their own front end, some banks want to build maybe their own AI models interfacing with Ncino, some banks have got big data links they want to share with us, and we have to integrate with it. So there are multiple reasons for people who want to integrate with Ncino as this central platform. And a few years ago, we decided that we're going to have this API strategy, and then we're going to eat our own dog food, which means the same APIs we use for our consumer front ends, our commercial front ends, will all be exactly the same APIs that we make available to the market, including to SIs, to build 3L products.

Pierre Naude: For instance, in the case of generative AI now, we will open up that modeling so that SIs can work with our customers and add more skills. That's our benefit. It's the bank's benefit to the SI's benefit, so that this whole ecosystem can proliferate throughout the bank and be everywhere. That is the whole goal of a platform play.

Speaker Change #182: Okay. Thanks, a lot for that question.

Speaker Change #183: It's interesting.

Speaker Change #184: <unk> got this hype since October being around the market you get lots of very important senior people like Jamie Diamond talking about it but then there's a problem with a regulated industry lots of laws and regulation lots of privacy of data issues.

Speaker Change #184: Feed bad data into AI bad outcomes. Okay. So what I'm seeing is the majority of people are very excited but they need guidance. They do understand what tools can be used how do I stay compliant how do I don't do the wrong things with it. So what we've seen is and Thats why the fire Marshal concept in the conduit comes in Israel.

Speaker Change #184: They are really hungry for solutions that will drive efficiency and help them to operate the bank better and they need people like us to actually build those tools to be very purpose built and very narrow in the focus of what solutions are what problems. They solve okay. That's the way they feel secure and so we have to take this journey with them and <unk>.

Speaker Change #184: Actually both solutions, that's very purpose driven.

Speaker Change #184: A very specific focused problem set.

Speaker Change #184: And that's where the industry will come along over time, because as you can imagine banking is a conservative business.

Speaker Change #184: It's about money and regulation and compliance.

Speaker Change #184: So that's what I saw most of the excitement was that was that the fact that we have the platform in place, but you have to do that first because audio business processes right get the <unk>.

Pierre Naude: That's the whole goal of making available the intelligence and the assets that are sitting under the platform. And I think that's good for Ncino. So we feel the direction of open APIs, which, by the way, you could monetize, is a good thing for the company as well as our customers.

Speaker Change #184: <unk> laid out and then after that you can literally start taking that platform steps and compress them through automation and the usage of data and analytics.

Speaker Change #185: And Adam just on your question about the 100 sales leads that was specifically for for dark boxes, which are now calling our commercial onboarding and deposit account opening solution, but that was specifically.

Speaker Change #185: At their booth, so a lot of excitement about.

Speaker Change #185: Bringing that technology into the <unk> family.

Speaker Change #185: Okay.

Gregory D. Orenstein: That's helpful. And just as a quick follow-up on the model, you highlighted some factors that led to the outperformance on operating income, including bad debt and lower hiring. Could you speak to the degree to which those factors are built into the second quarter guide as well as any variables we could potentially think of as we move through the year in terms of expenses. Yeah, Charles, you know, that was taken into consideration as we looked at Q2 and the rest of the year. You know, all those things we wanted to highlight, so you guys appreciated, again, the overperformance and what drove it.

Speaker Change #186: Okay, Great. That's really helpful. And then and then Greg just on the margin consideration there I think you talked about.

Gregory D. Orenstein: And again, we elaborated a little bit further around what would impact specifically Q2. But as you look at our guidance and the updated bottom line guidance that we provided that takes those factors into account. Got it.

Charles Joseph Nabhan: Thank you. Thanks, Charles. Thank you. One moment for questions. Our next question comes from Robert Trout with Macquarie Capital. Yes, I thank you, Pierre, Greg, and Harrison. Just one quick question, because I know we're running out of time.

Speaker Change #187: Hiring being a little bit behind plan, what do you need to see.

Speaker Change #188: On a revenue perspective or other signals to lean in on the hiring side and then.

Robert C. Trout: It wouldn't be a quarter if I didn't ask about the pricing shift and the momentum that you're getting there. Given what seems like it's been a pretty positive reception for a few quarters now, on the consumer side, is there any change to your timetable? Would you potentially accelerate that shift away from seats and towards hybrid, if you will, on the commercial side?

Speaker Change #188: How do we think about some of the sales and marketing expense within the context of that relative to the margin expansion plans that you laid out at Investor day last year.

Pierre Naude: We have some deals we already do on a platform basis; that's how we're testing the market. So, actually, sales leadership has the capability to apply that new model as they see fit. In the meantime, we're working with a consulting firm to really package and price the correct way, so we do it once, roll it out, and don't have to... Pull it back like my Sona system updated me, and I didn't like it.

Pierre Naude: So, what we have to do is to be very thoughtful because, by asset size and by solution type, not only do we have to optimize pricing, we have to make sure there are expansion capabilities, we have to make sure it's competitive in the market, and we have to make sure it makes sense to the customer and how they view pricing in the future. And to bring all those elements together, I'm going to take the next two months to get this finalized and get it right.

Pierre Naude: And then we will make it very clear on these calls with you all how that will impact your modeling and how the company's future will look based upon that. I will say, I think, to Pierre's note, you know, we are working with third parties to help drive, you know, and as you get into it, it's complex, right? It's much different than just changing a pricing SKU, you know, on a price list.

Speaker Change #189: So from a hiring perspective again, our folks who've got the green light to hire.

Speaker Change #189: I think what we've seen over the last quarter or three is.

Speaker Change #189: More and more talent in the market.

Speaker Change #189: And I think our teams are being very methodical about who they're hiring and bringing in to to help drive the company going forward. So.

Speaker Change #189: So from that perspective, it's nothing from the CFO office for example.

Speaker Change #189: And it's all around making sure we've got the right people, who can help drive growth.

Speaker Change #189: Typically when we talk about the breadth of products that we have.

Speaker Change #189: Going forward.

Speaker Change #189: That's that.

Speaker Change #189: As it relates from a margin perspective again, we're going to take a little bit of jump in our opex lines in the second quarter as I talked about and gave some reasons, but once we get beyond that again, we expect it to be fairly stable as the year progresses.

Speaker Change #189: I think we've talked about on our last call and before we feel very comfortable with the head count that we've got we're continuing to add in places, where we see opportunities again to drive growth and drive efficiencies.

Speaker Change #189: Youll note that our head count is up but thats really solely related to the acquisitions that we did and the employees that we bought on from from those two transactions.

Speaker Change #190: Okay Super helpful. Thanks, Pierre Thanks, Greg.

Adam: Thanks, Adam.

Thank you one moment for questions.

Speaker Change #191: Our next question comes from Ryan Tomasello with <unk> you May proceed.

Speaker Change #192: Hi, everyone. Thanks for taking the questions.

Peter last quarter, you talked about needing to hit roughly 40% of your annual bookings target to hit the guidance for the year. So just given the strong start to the year.

Speaker Change #192: Can you provide some context around where that visibility stand today and maybe somewhere.

Speaker Change #193: The puts and takes have been.

Speaker Change #193: And just given the strong bookings performance to start the.

The year, maybe just help us understand the drivers of the maintain top line guide for the year. Thanks.

Peter: Yes, so look.

Speaker Change #194: Firstly first quarter was a continuation of the momentum of fourth quarter and that gives us confidence to maintain the guidance and does exactly our expressed our market sentiment is at this point if.

Speaker Change #194: If you look at just further color on the bookings.

It was about 60 40 commercial.

Speaker Change #195: And I want to emphasize for all of you that the member.

Gregory D. Orenstein: And so I think we're on track with that. I think there's good momentum internally to leverage on what we did, you know, what we did on mortgages and consumers as we've previously talked about. And again, I think it also gives us an opportunity to look at the business a little bit differently in terms of highlighting the breadth and depth of the product, bringing different bundles together and pricing them together to really make buying Ncino much easier and much more straightforward.

Gregory D. Orenstein: And that's something that I think our customers will appreciate as well as our sales folks, so I think we're excited about it. But to Pierre's point, we're going to be very methodical about it, make sure we do it right, cross every T, dot every I, and I think we're on track in terms of our internal plan to execute on that. Very helpful.

Speaker Change #196: If you look historically at Cooper. So you look at a workflow solution that we want to cover all the people that is the breadth, we've taken that grips and expanded that into small business as well as consumer deposit account opening and now onboarding. Okay.

Gregory D. Orenstein: Thank you very much, Greg. Thank you. Thank you.

Speaker Change #196: So thats, how we get users, but now there's a depth issue and the depth is all about intelligence data AI analytics machine learning.

Speaker Change #196: And we literally kind of go deeper into the bank and look at very specific roles and see how we can replace it and that add tremendous value to.

Speaker Change #196: Through the efficiency in the operations of the bank. So we see that customer base of commercial as a tremendous asset to drive more automation.

Speaker Change #196: And to actually get more customer value out of it.

Speaker Change #196: So I would say that the first quarter confirms for me our confidence.

Speaker Change #196: On the downside you have to remember we have to look at churn and we always have to understand what is the churn impact going to be and.

Since I haven't seen any cuts in rates, although mortgages only about 15% 16% of total revenue of the company.

Does have an impact in that mortgage business is still running flat. Although we are taking market share all the time, because we are growing our mortgage business.

Speaker Change #196: What obviously is dilutive to growth overall, because it's growing slightly slower than the rest of the company.

Speaker Change #196: So I would say for right now we're going to hold what we have and we will see how the market develops by midyear.

Ryan Tomasello: Just to expand on that Ryan from a mortgage perspective that business still growing almost double digits. This quarter again the team continuing to do a great job in a difficult market. We added 15, new logos.

Ryan Tomasello: In the quarter.

Ryan Tomasello: But it is it is dilutive to growth and.

Ryan Tomasello: You would have heard my comments around bad debt, particularly on the AMB side subsiding, a little bit and so I think what we've seen is somewhat what we experience mainly last year was a lot of these RMB. These mortgage lenders who are just shutting their doors.

Ryan Tomasello: We've seen that I'd say.

Slow.

Ryan Tomasello: It's still expect some of those to happen, but not with the frequency with they did maybe last year and really as we think about churn in this year and I think I touched upon it on the last call, it's really more around M&A.

Ryan Tomasello: As you are left with a smaller number of larger better capitalized <unk> and some of those are becoming aggressive in taking market share.

Ryan Tomasello: Fortunately, we think many of those are our customers. So we hope that theres opportunities for for growth through M&A there.

Ryan Tomasello: But again, sometimes you end up on the wrong side of a train.

Ryan Tomasello: So as we think about the guidance.

Ryan Tomasello: You guys in late March when we gave that guidance, we want to be prudent as we think about the rest of the year.

Speaker Change #197: Great I appreciate all that color and then.

Speaker Change #198: Just a bigger picture one <unk> as you think about potential catalysts on the horizon and driving demand.

Speaker Change #198: And bookings over over maybe the next six to 12 months.

Speaker Change #199: I was hoping you can just help us contextualize the importance of the different variables in play between some of the more obvious ones like rates. The U S. Presidential election, maybe just broader urgency that AI is putting.

Speaker Change #199: On the industry.

Speaker Change #200: How would you rank order the importance among those and any other major variables that come to mind as you think about.

Speaker Change #200: The bookings environment over the next six.

Speaker Change #200: Six to 12 months.

Speaker Change #201: The first thing you have to realize is that banks. This year operate under a lot more stability and a stable macro environment with the rates being stable.

Speaker Change #201: Last year was all about survival when you have a liquidity crisis. The management team's done OLED progress through a very tactical mindset to just survive.

Speaker Change #201: This year I would say the Bruce from that experience, but they are carefully moving forward with more strategic options. So what I find is a lot of scrutiny in deals.

Speaker Change #201: And really making sure that they prioritize their spending in the right places Fortunately with what we do we get power buys at the top of the list. Many many times. However, there is still a posture of conservatism.

Speaker Change #201: Let's see.

Speaker Change #201: Now what's going to happen as time goes.

Speaker Change #201: And the rates stay stable and then upcoming maybe.

Speaker Change #201: Maybe coming down a little bit and look what it is.

Speaker Change #201: It's going to be a quarter point cut so it's not material in dollar terms, but it's more of a sentiment and a signal to the market. What youll see is that banks will become more aggressive and realizing they have to run an efficient operation.

Speaker Change #201: When you come to the election, the changes of administrations. We started this company under Obama.

Speaker Change #201: We've added under Trump portfolios, we now under <unk>. So these administrations come and go.

It's more compliance oriented we've got the tools to solve that for you maybe its more growth driven we've got the tools to help your growth if it's more about profitability and efficiency. We've got the tools to drive automation and help you to become more efficient.

Speaker Change #201: But all the bankers, though they have to come to an efficiency ratio of around $50, 51% some of them by top banks around around $39, 40% okay.

Speaker Change #201: So you can operate these banks at very efficient and highly profitable margins by utilizing encino and thats. The message, we take out and Thats the message that they confirm for us in our surveys and the feedback we're getting.

Speaker Change #202: Great. Thanks for taking the questions.

Brian: Thanks, Brian.

Operator: And as a reminder, to ask a question, please press star 11 on your telephone. Our next question comes from Chris Kennedy. William Blair, you may proceed. Good afternoon.

Speaker Change #203: Thank you one moment for questions.

Cristopher David Kennedy: Thanks for taking the question. Just a quick one. Any way to think about free cash flow for the rest of the year? I know there's some seasonality here. Thank you. Yeah, thanks, Chris. You know, we don't really guide the free cash flow.

Gregory D. Orenstein: You know, we did note that Q1 is historically our strongest cash flow quarter. You know, I don't see us tracking any differently in terms of how we have historically tracked from Q1 throughout the year to Q4. But yeah, otherwise, really nothing, nothing to note.

Speaker Change #204: Our next question comes from Brent <unk> with Piper Sandler you May proceed.

Cristopher David Kennedy: Again, obviously, we have been increasing our cash. And ultimately, that's been allowing us to do things like make these tuck-in acquisitions that really can help drive growth and value. Thanks for taking the question. Thanks, Chris.

Pierre Naude: Thank you. I would now like to turn the call back over to Pierre Naude for any closing remarks. Thank you, operator. Thank you all for attending today. We've always said that customers are the heart of Ncino's mission, so the opportunity to spend three days with customers and partners at Insight earlier this month fuels my excitement about the road ahead. We learn so much from our customers. They shape our product roadmap and drive our technological innovation.

Pierre Naude: We are grateful for their trust in us and the opportunity to continue shaping the financial services industry. And, as always, I appreciate the hard work and loyalty of the global Ncino team. After another quarter of solid execution, I'm excited for your continued efforts as we work together to accelerate the digital transition of financial institutions around the world. Thank you all. Talk to you later.

Brent: Good afternoon, I appreciate that I guess PPR for you if I look at dock Fox Allayed grow it looks like you are.

Speaker Change #204: <unk>.

Speaker Change #205: Reinvesting here in that community banks small business area.

Speaker Change #206: But what's driving.

The need or the opportunity is there some pull there where you decided to buy versus build because the demand was there walk walk us through the logic in.

Speaker Change #207: And what Youre hearing.

Speaker Change #208: The sense of urgency from some of those community banks and why you are leaning in here now.

Speaker Change #209: Yes, So let me talk about Onboarding first look Onboarding has always been an interest of ours, but it came in pecking order I wanted to do small business and consumer lending and deposit account opening first but onboarding for commercial businesses is a highly complex.

Speaker Change #209: And it literally is as bigger effort.

Speaker Change #210: Hello, Okay. Some of these deposit account openings.

Speaker Change #210: Because of regulation and money laundering.

Speaker Change #210: Up to six months for them to get the account opened depending our complex and we've seen international business. Okay.

Speaker Change #210: Automating that and helping banks for that is a tremendously attractive market and Dr. Crops. As you know we always start volume for the community bank market. Our dock crops are going to accelerate that in the moment, they're fully integrated that product will go all the way up to enterprise.

Speaker Change #210: So theres tremendous pool for them.

Speaker Change #210: And that by the way will then go internationally and be a global product. So the onboarding of commercial customers was always an interest to US was the natural next step in building out the platform.

Speaker Change #211: Let me come to a Lego.

Speaker Change #212: <unk> was more of an impediment in the credit Union market, where a lot of indirect auto lending happens.

Speaker Change #212: Some banks are doing it.

Speaker Change #212: That business falls out of favor and vacuum flavor, depending on economic climates, but the credit union market. They see it as a same store member service.

Speaker Change #212: So they actually have many of these dealers signed up and you can like do you know you go to the data that you get demand behind the curtain you get your financing okay.

Speaker Change #212: And Thats, where the solution is helping them to connect with these dealerships and do that indirect lending.

Speaker Change #212: And it's highly complex deeply integrated solution and for us to have both that would have added no value in support of a commodity in this product.

Speaker Change #212: I see as more as an add on to consumer lending. So when you go in you can replace all of our new technology with the old stuff they've got and then.

Covering this indirect lending issue that if you don't have that they cannot select you because then they have multiple vendors.

Speaker Change #212: That's where that one came true by the way indirect lending does apply also to credit unions to banks and it goes all the way up to enterprise.

Brent: I think it's a U S based product, yes, Brent I think I would also view that our view that the Allegro again, as we think about how far our consumer lending.

Solution has come and the confidence we have in it.

Brent: As evidenced by the enterprise bank that we highlighted a quarter or two ago that that purchased it I think it's really rounding out the functionality to bring to market.

Peter: As Peter noted frequently you'd have an RFP, where it's a box we would not be able to check.

Peter: And you'd get dinged for that.

Peter: But ultimately now we're able to give this net new technology and we think the market is asking for it because.

Peter: Because we don't see other net new technology like what we have on the consumer side out there.

Speaker Change #213: Great helpful color, there and then just Greg for you one quick follow up on <unk>.

Speaker Change #214: The growth did accelerate here on a year over year basis in the quarter.

Speaker Change #215: It sounds like you're flagging uncertain continued uncertainty in that in that mortgage market, but was all of.

Speaker Change #216: The backlog build here the quarter tied to kind of commercial was it like strong renewal just any additional color on on why that CRP and growth actually accelerated even in a argued.

Speaker Change #216: Arguably a very tough environment.

Speaker Change #217: Yes look it was a good quarter in.

Speaker Change #217: And also just the mix that we had which we always highlight can can impact.

Speaker Change #217: Our Po came into play we talk about the commercial side.

Speaker Change #218: We had three commercials I know, we frequently get questions about commercial saturation, we had three customers that each expanded with us over 40% from an SUV perspective, just solely expanding their commercial usage of us this quarter.

Speaker Change #218: And so we still see plenty of opportunity on the on the commercial side.

Speaker Change #219: The other thing with mixed Brent sure.

Speaker Change #219: A little bit of the enterprise customers again coming back to to buy.

As the events of last year in the liquidity crisis get further and further in the rearview mirror.

Speaker Change #220: So that's another thing that that I would highlight and I guess finally, just appears earlier comments when we talk about commercial.

Speaker Change #220: And again people talk about commercial lending we have the historic workflow commercial lending business that we started from but as we think about commercial and as you guys think about commercial we really would.

Speaker Change #220: Urge you or encourage you to think about it more broadly.

Speaker Change #220: With all of the other things that we're bringing to those commercial customers.

Speaker Change #220: Like the continuous credit monitoring that we announced with <unk> like banking adviser like Doc Fox like Otto spreading like commercial pricing and profitability and so as we look at that commercial.

Speaker Change #220: Customer base again, we view it as a tremendous asset and we think there is there is a lot of runway there for us.

A lot of cross sell for sure very clear thank you.

Brent I: Thanks Brent.

Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.

Operator: , , , , , , , , , , , , , , , , , , , , , , , , , ,. ... ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? , , , , , [inaudible] ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? [inaudible] Good day and thank you for standing by.

Speaker Change #222: Thank you one moment for questions.

Speaker Change #223: Our next question comes from Alex Sklar with Raymond James You May proceed.

Alexander James Sklar: Great. Thank you Pierre great to hear on the record first quarter bookings I wanted to dig into your comments in particular on the U S. Tier one in enterprise activity. I think you said it started coming back what did you see from that segment in the quarter and how should we think about that segment contributing to bookings.

Alexander James Sklar: Year relative to kind of its current mix of your business today.

Pierre: What im seeing is the same excitement obviously their biggest staffs in a bit more sophistication on the it side, but the same excitement with the same questions around the usage of AI and data.

Harrison Masters: Welcome to the Ncino first quarter fiscal year 2025 financial results conference call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Speaker Change #224: Remember if you look at the critical mass of data by bank.

Speaker Change #224: You could say that JP Morgan Chase and maybe at Wells Fargo has got critical mass.

Speaker Change #224: But the rest of them don't have enough of our loan book to actually have a representative picture of all the areas in states in the U S.

Speaker Change #224: With our data Lake and the products, we're building on and the way, we actually Anonymize and take these data into our big data Lake.

Speaker Change #224: And then provide to them much deeper insight into the activities of commercial lending.

As well as automating the review processes and that we all have to think about commercial loan origination.

Speaker Change #224: Most of the work actually sits in quarterly.

Speaker Change #224: And six monthly and annual reviews of existing loans and making sure. The book is priced as well as collateralized and covenant that the right way.

Speaker Change #224: So there is a massive middle back office operation happening without loan origination at all okay and.

Speaker Change #224: And Thats really the opportunity to drive this automation and Thats fair.

Speaker Change #224: RBC originator corporations partnership with US is very helpful. And then you pair that.

Next to that.

Speaker Change #224: Generative AI tools, we're putting together in there and it's going to literally removed chunks of processes that we've built over 12 years into the workflow.

Harrison Masters: I would now like to hand the conference over to your speaker today, Harrison Masters, Director of Investor Relations. Good afternoon, and welcome to Ncino's first 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, 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 statement.

And Thats the interesting part here is that we can now take a broad footprint of what we laid out for our bank because we know exactly what they do we can automate some of this and drive a lot more efficient in a lower cost operation.

Harrison Masters: 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 gap metrics can be found in today's earnings release, which is available on our website and as an exhibit to the Form 8K 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 now turn the call over to Pierre. Thank you, Harrison.

Pierre Naude: And thank you all for joining us today. We are very pleased with the start of the year. We built on the sales momentum from Q4, with gross sales in the first quarter exceeding our plan and establishing a company record for gross sales in the first quarter. We saw strength across the business, with existing customers expanding their adoption of our platform, most notably in the U.S. enterprise, community, and regional markets. Last quarter, I noted that we expected net sales for fiscal 25 to increase approximately 50% over last year.

Speaker Change #224: And we will share in that efficiency as they pay us for these products.

Pierre Naude: Our strong Q1 performance certainly increases our confidence in achieving that goal. At year end, we pointed to stabilization of interest rates as key to the improving tone of customer conversations and more normalized buying behavior. The December 2023 Federal Reserve Open Market Committee meeting provided stability that was missing in the U.S. market for almost two years.

Pierre Naude: With more visibility into their own financial performance, more and more financial institutions have been able to refocus on strategic initiatives to improve their operations, create additional operating efficiencies, provide better user experiences for their clients, and improve their competitive positioning. This is translating to more technology spending. 72% of the executives we polled in an internal survey this month responded that their IT budgets have increased from last year, with 44% citing an increase of over 5%. While at this rate, stability has been a positive for most of our business. Rates being higher for longer have kept the mortgage market under pressure.

Pierre Naude: Despite the difficult market conditions, our U.S. mortgage business continued to perform well, adding 15 new logos and again exceeding internal quarterly gross sales targets, with strength in both the FI and IMB market segments. The difficult mortgage market over the past couple of years has reinforced the imperative for mortgage lenders to leverage technology to improve profitability. We can provide a more enjoyable and efficient customer experience and attract the best talent. Our results again reflect our success in displacing competitors and cross-selling into our banking installed base.

Pierre Naude: We are currently in a waiting game for the first Fed rate cut, and the puts and takes of the demand equation do add a level of difficulty in predicting how and when rate cuts will impact mortgage volume.

Pierre Naude: That said, we are confident that our market-leading technology and our ongoing commitment to product innovation will continue to yield share gains. Obviously, there are nuances by market, but we see priorities generally aligned across all of the markets we serve. The liquidity crisis a year ago and the ensuing difficult business cycle imparted some lasting lessons for our customers and prospects. Operational efficiency matters, and quality digital experiences are table stakes for their clients.

Pierre Naude: As the only cloud-native single platform that spans lending, onboarding, and account opening operations across business lines within a financial institution, we are uniquely positioned to bring efficiency and a modern digital experience to financial services. This was on full display for over 1600 attendees at Insight, our annual user conference held in Charlotte just two weeks ago. In responding to a registration survey, more than 70% of attendees confirmed that improved efficiency would be the number one priority for their institution in 2024.

Speaker Change #225: Okay, Great Yeah, No RBC was a was a big part of though.

Speaker Change #224: Right.

Speaker Change #226: Keynote this year so good to hear on that color one more for you Pierre ore polygon I don't know if youre, taking part in the Q&A, but can you just talk about what the launch of simple Nexus the front end the omnichannel capabilities and maybe ill just lumpy from the indirect auto functionality that you talked about in response to Brent Brent question, what does that mean for the retail lending segment.

Speaker Change #227: I know Greg called out that's one of the areas youre going to spend more on in the back half of the year. So what's changed there in your mind on consumer lending.

Pierre Naude: This aligns directly with our mission of bringing people, processes, and data together on a single customer-centric platform. As the first steps toward digital transformation can begin anywhere within a financial institution, we've been focused on ensuring that all of our solutions are market-leading.

Speaker Change #228: So let's talk about the consumer facing side of this okay.

Speaker Change #229: American Airlines change their whole booking operations and issuing tickets et cetera, but you still have to make a phone call.

Speaker Change #229: So the old stuff didn't Bellevue months really to help them in the middle back office for us putting up.

Speaker Change #229: Probably the most sophisticated elegant front end solution, where consumers now can do this stuff and go self service it removes the burden from the bank.

Speaker Change #229: It gives them a modern platform.

Speaker Change #229: Drive self service to an extent danone in banking today, Okay. So now all of a sudden people start believing that all that hard work, we did toward the middle back office, if you plug that frontline team.

Speaker Change #229: Drive that consumer adoption and self service they will always covering 12 and thats. The difference that this front end is making it is the final piece of the puzzle, but we never wanted to do it until we've got the middle back office clean otherwise you have a good risk pool front end and you wait three days for manso, Okay and that we are moving to a world where.

Speaker Change #229: Five years from now.

Speaker Change #229: I believe consumer and small business banking at the low end.

Speaker Change #229: It will be mostly driven by self service and intuitive tools that drives intelligence behind the scenes to advice and help consumers to be totally self service and it should be so simplistic just like your iPhone Covenant box you don't get Emmanuel you don't do it.

Speaker Change #229: Mining cost savings is going to happen, we're going to take banking to that same level of efficiency and automation.

Speaker Change #229: The Allegro one is just to follow on indirect lending because that's what the market's phase once and if they get this end to end solution that can do that as well. They can literally it opened at a place that current disparate systems, they've got between 10 and 15 systems doing all the stuff we're doing.

Speaker Change #229: We've been getting with a single platform.

Speaker Change #230: <unk> totally different self service you want me to come halfway through application walk into the brands everything is right. There. The brand's first of all pick you up and say, yes, where you left off I'll finish it for you so.

Speaker Change #230: Lots of excitement around that.

Speaker Change #230: And if you hear the feedback we get from some of our largest customers around the mortgage experience where people literally wrote them, let us to say.

Speaker Change #230: To take the dog for a walk glass and apply for a mortgage on a very complex product and solution.

Speaker Change #230: That's the kind of elegance, we want to drive it to the market.

Speaker Change #231: Alright, thanks for that color Pierre.

Speaker Change #232: Thanks, Alan Thank you Alex.

Speaker Change #233: One moment for questions.

Speaker Change #234: Our next question comes from Korea with Barclays. You May proceed.

Speaker Change #235: Great Hey, guys. Thanks for taking my questions here.

Peter maybe for you guys.

Greg: Hey, Peter Hey, Greg.

Greg: Peer maybe maybe for you.

Greg: Double click a little bit on just the consumer business a little bit.

Greg: To your earlier point right now.

Speaker Change #236: You are kind of building a whole sort of end to end system. There on consumer maybe you could just talk about it from a demand perspective qualitatively how do you feel about the pipeline for for for consumer lending this year and as that tool set has matured how are you kind of looking at our competitive win rates right now of course all anecdotally.

Speaker Change #237: Yes, so I would remind you that consumer includes indirect lending mortgage.

Speaker Change #237: Consumer finance unsecured secured.

Speaker Change #237: Secured non real estate.

Speaker Change #237: And then when you get to real estate is mortgage plus helocs et cetera, okay.

Speaker Change #237: So it's a fairly big bundle and anyone who has been to insight.

Speaker Change #237: Actually one of the things I noticed is we've got all these consumer products in a different booths and you walk around and it's actually one big consumer platform. Okay.

Speaker Change #237: What we are seeing is.

Pierre Naude: For example, in the first quarter, an over $15 billion asset bank expanded its use of Ncino from treasury onboarding to include small business and consumer lending, as well as deposit account opening. We expanded ACV by nearly seven times within this account in Q1, even though they are not yet a customer of our flagship commercial lending solution. In April, we announced a number of enhancements to our consumer lending solution, including the omnichannel experience we've discussed for the past few quarters.

Pierre Naude: Insight was the GA launch of Omnichannel, and we couldn't be more excited about the incredibly positive reaction and feedback from our customers for this product as we make the same truly mobile-first point-of-sale experience, already an important differentiator for our U.S. mortgage solution, available across all of consumer lending. Rounding out our consumer lending enhancements are new capabilities for indirect auto lending made possible through the recent tuck-in technology process In evaluating both partners by decision to solve for indirect lending, we decided the most efficient way to accelerate development for the specialized vertical was to acquire the technology from a valued partner in the credit union space through the state's financial group.

Speaker Change #237: That banks have done the commercial piece with us.

Pierre Naude: You'll also recall we discussed the acquisition of Doc Fox on our last earnings call. This acquisition provides us with new onboarding and account opening capabilities for small business and commercial banks. Insight was the first opportunity for many of our customers to see how the solution digitizes and streamlines a traditionally high-touch, inefficient, and time-consuming process. The feedback has been tremendous, including over 100 new sales and leads generated at Insight.

Pierre Naude: We continue working with early adopters on an integrated product initially targeted at the community and regional banking market in the U.S. One mutual customer has reported onboarding time for business accounts being cut from two weeks to under an hour with DocFox. In our early testing of the market, we have found solving the commercial onboarding platform for FIs can yield around half of the ACV we expect for commercial lending. We are incredibly excited about the opportunity for DocFox, which will be referred to as the Ncino Commercial Onboarding and Account Opening Solution, and look forward to expanding this offering for U.S. enterprise customers later this year.

Speaker Change #237: And now the single platform story is resonating they are beginning to see that not only do the doing the investment alright.

Pierre Naude: Having laid a foundation with an integrated platform of best-in-class solutions, we are uniquely positioned to continue leading the digital transformation of financial services with automation, data, and intelligence. Our newest NIC offering does exactly that.

Pierre Naude: Continuous credit monitoring leverages our partner, Rich Data Companies' AI decisioning platform, to automate what were previously manual loan review tasks at the customer and portfolio level. Through this collaboration, we are setting a new standard in how financial institutions manage credit risk. We were pleased to announce M&T, an Ncino customer since 2016, as our first U.S. customer on continuous credit monitoring. The solution will enable M&T to detect more early warning signs and provide insights to its employees to drive even more timely and tailored banking experiences for its clients.

Pierre Naude: This is just one example of how key partnerships extend and enhance our platform. And perhaps the most innovative developments shown at Insight were the banking advisor products. We demonstrated how we have productized generative AI to automate the creation of deal and credit memos, to quickly interpret policies, to chat with, upload, locate, and file documents, and to turn PDFs into data.

Pierre Naude: Our customers are so excited by this breakthrough technology that we actually got reprimanded by the fire marshal for overcrowding at the Insight Banking Advisor booth. As a reminder, Ncino first earned our customers' trust as we led them on the journey of cloud adoption. Our goal is to install that same trust as a partner in the journey to adopt AI. Ncino is differentiated as a vendor in financial services, not only by our global reach and ability to serve institutions of all sizes.

Speaker Change #237: And I would point, you that $15 billion asset bank debt.

Pierre Naude: But by being home to the mission-critical lending, account opening, and onboarding processes across a single platform for all of our financial institutions' products and services. Ncino's roots are in business process reengineering, and with AI, we have the ability to drive intelligence and automation like never before. With that, I'll turn the call over to Greg to take us through the financials. Thank you, Pierre.

Gregory D. Orenstein: And thanks, everyone, for joining us this afternoon to review our first 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 gap metrics can be found in today's earnings release, which is available on our website and as an exhibit to the Form 8K furnished with the SEC just before this call. We are very pleased with our first quarter financial results. Total revenues for the first quarter of fiscal 25 were $128.1 million, an increase of 13% year over year.

Speaker Change #237: <unk> grew ACB seven X by by signing up with us even without having commercial on there yet.

Gregory D. Orenstein: Subscription revenues for the first quarter were $110.4 million, an increase of 13% year-over-year, representing 86% of total revenue. As previously discussed, revenue growth rates this year are being impacted by the heightened churn we saw last year, particularly in the IMB market. Churn in the first quarter did moderate as expected, and while we will continue to closely monitor the interest rate environment, our churn expectations for the rest of this year remain in line with the $20.5 million we discussed for the full year.

Gregory D. Orenstein: Professional Services revenues were $17.7 million in the quarter, growing 8% year over year. Non-U.S. revenues were $25.8 million, or 20% of total revenues in the first quarter, up 34% year over year. Non-GAAP gross profit for the first quarter of fiscal 25 was $84.4 million, an increase of 14% year-over-year. Non-GAAP Gross Margin was 66% compared to 65% in the first quarter of fiscal

Speaker Change #237: I am seeing demand coming.

Speaker Change #237: By the way, it's just like the iPhone.

Speaker Change #237: On day, one you loved your Blackberry I have never seen youre, using the Blackberry, but mono potentially add one okay.

Speaker Change #237: And so it takes people a little bit to say, okay. It's a real now and yesterday you have to realize <unk>.

Speaker Change #237: <unk> cannot afford the personal services for products that are unprofitable.

Speaker Change #237: That's a simple math in banks today I meet with many many Ceos of banks and that is the most common theme of platform efficiency as we cannot keep on spending time and money with people of products. It's unprofitable.

Speaker Change #237: The automation drive from the efficiency drive is going to do that so by the way. The pipeline is healthy we feel good about it customer references LP and the existing projects, where we're installing consumer is healthy so I feel overall that as we have more success that demand will actually go.

Speaker Change #238: Got it got it that makes a ton of sense Gregg maybe for my follow up for you.

Speaker Change #239: I'm going to say I love to just get your thoughts just about the services business right now I think strategically we've talked about in the past how it might be nice to maybe worked with more so.

Speaker Change #239: My partners, there to sort of sort of balance some of the work and it looks like some of that services mix is going down as just a percentage of total revenue. Maybe the question is where are we on that journey and how do you think about that mix longer term.

Speaker Change #240: Yes, I think that journeys just continues as is I think us as we've talked about pretty consistently wanting to push services as much as we can to our Si partners continues to be the strategy.

And you may see some lumpiness from time to time based on project not going too.

Our partner because maybe they wanted us to do it or going to a partner.

Speaker Change #240: But ultimately we think that's a fairly steady state business.

Speaker Change #240: And it provides a lot of value for our customers, whether it's us directly implementing it and supporting the customers are working with our Si partners and again, that's how our folks here really.

Speaker Change #240: To learn more and more about the product and get more and more feedback from our customers about the product, which then goes right back into our R&D organization.

Speaker Change #240: And helps drive the continued innovation I, just wanted to emphasize or add to that.

Speaker Change #240: Projects go better with Encino asked people on it.

Speaker Change #240: So we always emphasize regardless of the size of the bank even involved that encino put some people on the project.

So.

Speaker Change #240: Just because of the.

Speaker Change #240: Closest to the product people they come home on weekends, they come out on Friday. They go talk to product on the center was built.

Speaker Change #240: And so you won't see the current percentage of revenue will probably continue.

Speaker Change #240: We don't deemphasize services, but we've tried to keep a nice balance to make sure our customer sat stays up we get the product feedback.

Speaker Change #241: That makes a lot of sense. Thanks, guys.

Speaker Change #242: Thanks, Doug.

Speaker Change #243: Thank you.

Speaker Change #244: One moment for questions.

Gregory D. Orenstein: Our subscription gross margins reflect approximately 70 basis points of benefit from improved unit economics under our agreement with Salesforce. We expect continued subscription gross margin improvement in line with the 1% increase for fiscal 25 we discussed last quarter, as we lap annual billing events for existing customers and have the opportunity to move more of them on to our new Salesforce pricing. Non-GAAP operating income for the first quarter of fiscal 25 was $24.4 million, compared with $10.9 million in the first quarter of fiscal 24.

Speaker Change #245: Our next question comes from Terry Tillman with Securities You May proceed.

Gregory D. Orenstein: Our non-GAAP operating margin for the first quarter was 19% compared with 10% in the first quarter of fiscal 24. Our operating margin benefited from hiring being slightly behind plan in the quarter, favorable insurance renewals, and improvement in bad debt expense, particularly in the IMB space. Non-GAAP net income attributable to Ncino for the first quarter of fiscal 25 was $22 million, or $0.19 per diluted share, compared to $8 million, or $0.07 per diluted share, in the first quarter of fiscal 24.

Gregory D. Orenstein: Our remaining performance obligation, or RPO, increased to $1.07 billion as of April 30, 2024, up 17% over $914 million as of April 30, 2023. Additionally, with $702 million in the less than 24 months category, up 13% from $623 million as of April 30, 2023. We had another strong expansion quarter with contract extensions accompanying those deals. Thus, we had healthy contract duration ads that accompanied the incremental ACV. We ended the quarter with cash and cash equivalents of $134.8 million, including restricted cash.

Terrell Frederick Tillman: Yes, thanks for taking my questions here, Greg Harrison.

Gregory D. Orenstein: Net cash provided by operating activities was $54.4 million compared to $31.3 million in the first quarter of fiscal 24. Capital expenditures were $342,000 in the quarter, resulting in free cash flow of $54.1 million for the first quarter of fiscal 25.

Gregory D. Orenstein: As a reminder, the first quarter is typically our seasonally strongest cash generation quarter. As a result, you will note our statement of cash flow reflects investing activity net of acquired cash of $91.2 million. This reflects $19.9 million of all-cash purchase consideration for Allegro and $74.3 million for Doc Fox, including approximately $2 million of purchase consideration that was recorded as post-combination expense which was excluded from our non-GAAP results. With the addition of indirect lending functionality, Allegro expands the market opportunity for our consumer lending product to a larger number of banks and credit unions, which we expect will further increase our competitiveness in consumer lending. The revenue contribution expected this fiscal year from this technology is immaterial. We borrowed $75 million on our revolving credit facility to finance the Doc Fox acquisition and subsequently repaid $20 million within the quarter.

Terrell Frederick Tillman: Maybe the first question I remember on prior calls attempting to local language. When you would have an international win so whether it's France or.

Gregory D. Orenstein: We plan to pay down the remaining $55 million of borrowed principal during the rest of this fiscal year as we continue to generate cash. We will use cash on hand to fund the acquisition of Allegra. Turning to guidance for the second quarter, we expect total revenues of $130.5 million to $131.5 million, with subscription revenues of $112.5 million to $113.5 million. This guidance assumes year-over-year subscription revenue growth of 13% to 14%. For fiscal year 25, we continue to expect total revenues of $538.5 million to $544.5 million, with subscription revenues of $463 million to $469 million.

Gregory D. Orenstein: This full-year guidance assumes year-over-year subscription revenues growth of 13% to 15%. Non-GAAP operating income in the second quarter is expected to be approximately $17 million to $18.5 million, and non-GAAP net income attributable to Ncino per share is expected to be 12 to 13 cents. This is based upon a weighted average of approximately 117 million diluted shares outstanding.

Terrell Frederick Tillman: Or Dutch or I think maybe one time in all New Zealand.

Gregory D. Orenstein: Insight is expected to add approximately $2 million of incremental sales and marketing expense in the second quarter on a sequential basis. Additionally, annual merit increases affected in April plus salaries and wages of people onboarded with the acquisitions will contribute to a higher quarterly operating expense run rate. Also, in light of the incredible customer demand we saw at Insight for expanded product capabilities, we plan to reinvest some of the Q1 bottom line overperformance in sales and marketing to drive even greater adoption of our newer solutions and to more aggressively pursue the consumer lending opportunity in the credit union market.

Gregory D. Orenstein: That said, we are increasing our non-GAAP operating income outlook for the full year and now expect non-GAAP operating income for fiscal 25 to be $86 million to $89 million. Full fiscal year 25 non-GAAP net income attributable to Ncino per share is expected to be $0.65-$0.68 based upon a weighted average of approximately 117 million diluted shares outstanding.

Speaker Change #246: You talked about the enterprise business being strong in the U S community banks, and just generally youre seeing that pick up in the U S. It seemed like international revenue was strong at 34% year over year growth, but how was it in terms of new business with new logos and door expansion sales with international customers.

Speaker Change #246: And then I had a follow up.

Speaker Change #246: Yes.

Speaker Change #246: Yes.

Speaker Change #247: And you can make an English accent.

Speaker Change #246: Yeah.

Speaker Change #248: Got it.

Speaker Change #248: We had a great UK institution.

Speaker Change #248: That signed up for us that we're proud of but I would remind you that the international business is more of an enterprise business. So it's lumpy.

Pipe is healthy we feel good about that.

Speaker Change #248: Plus I'll remind all Americans on the call that Canada as North America. So we've got Canada, the UK Ireland.

Gregory D. Orenstein: With that, Operator, we'll open the line for questions. Thank you. As a reminder, to ask a question, please press star one on your telephone and wait for your name to be announced. To withdraw your question, please press star one again.

Speaker Change #248: Say, we're very excited about Spain.

Speaker Change #248: We've got a nice operation in Spain, going and realized we've got Spanish banks outside of Spain as customers and what we're beginning to see since we put a focus on Spain.

Speaker Change #248: The Nordics and.

Speaker Change #248: Around the Netherlands, and Belgium over Benelux.

We are seeing increasingly demand in those regions, but specifically, Spain. We're very excited about Spain is also the entry point for us into Latin America.

Speaker Change #248: Those are very large Spanish banks once platforms to do global business with and so that's an exciting development.

Speaker Change #248: And I should also mention that Japan looks very healthy there are some very exciting developments.

Speaker Change #248: As you can imagine it's a slow moving.

Speaker Change #248: But as we get more traction and get more.

Speaker Change #248: Our references but we had.

Speaker Change #248: Two different institutions from Japan coming out two insights I had meetings with them in general.

Speaker Change #248: And just exciting development because of the size and the breadth of what they want to do with us.

Speaker Change #248: And Salesforce also has a big presence in Japan. So that's also helpful for us.

Speaker Change #248: So I feel good about the natural business, but I want to comment in this short term because of the addition of Dr trucks, and the Lego and the emphasis on going deeper into the credit Union space, and adding sales and marketing. There you may see that the U S accelerated growth a little bit.

Speaker Change #248: And then the international will catch up again that does not diminish the size of the opportunity internationally. It just say over time as we invest because we always felt building program into regional and then we grow it up okay.

You might see that phenomenon a little bit.

Speaker Change #249: Got it well maybe I'll just go ahead.

Speaker Change #250: Give a little bit of Japanese can EUR, Ohio designers.

Speaker Change #251: So the second question and then ill stop for everybody's sake is on the Nic side.

Speaker Change #252: I think 39% of platform customers, who are using at least one of our solutions at the end of last quarter.

Speaker Change #253: Maybe that ticks up a little bit just anything Greg could share on that and then secondly look it seemed like after you launched auto spreading you had a lot of good early wins.

Speaker Change #254: I didn't hear a lot about new auto spreading deals that maybe you hadn't but it does seem like it's a really great efficiency play. So is there still more in the tank so to speak in terms of getting more customers to subscribe to that thank you.

Speaker Change #254: Yes.

Speaker Change #255: We do we do see a great interest there.

Speaker Change #256: If anybody was at insight will remember I talked about data consumption and the excitement with AI around there today a lot of that technology is based on OCR technologies.

And in the future to grow based on AI with vision capabilities, which is going to give you a $5 nine accuracy percentage and so I think that whole autos spreading document in gestation.

Speaker Change #256: This is going to trains tremendously over the next six to 18 months okay.

Speaker Change #256: And we have the tech we have the people building it.

Speaker Change #256: Personal demos on this stuff.

Speaker Change #257: So there is great excitement around how that continues into <unk> value prop is playing out and I think that's going to accelerate that product again, Greg anything to add yes, Terry you can assume again, it's just.

Speaker Change #258: From a quarter ago that there would have been a small tick up in that percentage.

Speaker Change #259: Other thing just to getting back to the UK accent.

Speaker Change #260: Is that that lender that we'd announced did did purchase auto spreading.

Speaker Change #260: As well and so we didn't highlight it but I think more and more again as we bring these these products to market there'll be packaged.

Speaker Change #260: And ultimately again this is about a platform and all the things that we can do for a bank on a single platform and so the lines may get blurred a little bit over time, as we again continue to expand broader and broader and deeper and deeper in our financial institution.

Speaker Change #261: Okay. Thank you.

Eric: Thank you Eric.

Eric: Sure.

Operator: One moment for questions. Our first question comes from Adam Hotchkiss with Goldman Sachs. He may proceed. Great, thanks so much for taking the questions.

Speaker Change #263: One moment for questions.

Speaker Change #264: Our next question comes from James Fawcett with Morgan Stanley You May proceed.

Adam R. Hotchkiss: Pierre, I appreciate the comments you gave around insight. We'd love for you to just dig a little bit more into what are some of the key things you learned from customer conversations? What are they asking for around themes like AI and innovation? And then any additional color you can give around the 100 new sales leads generated there? What products were people really most focused on?

Speaker Change #264: Hi, Brian, It's Michael and Fine town for James Thanks for taking my question really interesting use cases on the banking adviser from peer Greg I was curious I think you previously mentioned that you werent expecting any revenue contribution from banking adviser in FY 'twenty five is that still the right way to think about it despite the product velocity and customer excited.

Speaker Change #265: You guys are seeing or do you think we can see some uplift this year.

Speaker Change #266: Yeah, it's still not part of our plan Michael.

Speaker Change #267: And again, I think getting back to two.

Speaker Change #268: Thank you your advisor same with Doc Fox, we highlighted what we brought onto.

Speaker Change #268: And seen only purchase did again our focus this year is on making sure we integrate that and really make it fully part of the single platform versus having a separate products. So nothing has changed in.

Speaker Change #268: Either one of those cases at this point in time.

Speaker Change #269: Got it that's helpful. Maybe just a high level strategic question for you and a follow up on the earlier question, but obviously, there's been some developments just in terms of Basel III and game I'm curious it seems like well probably get some form of resolution towards the end of this year, but it seems like just in terms of easing of capital requirements more broadly.

Pierre Naude: Yeah, thanks a lot for that question. You know, it's interesting. AI has had this hype since October of being around the market; you get lots of very important senior people like Jamie Dimon talking about it. But then there's a problem, you know, with a regulated industry, lots of laws and regulations, lots of privacy, a lot of data issues. If you feed bad data into AI, you get bad outcomes, okay? So what I'm seeing is the majority of people are very excited, but they need guidance. They need to understand what tools can be used, how I stay compliant, and how I do, don't do the wrong things with it.

Pierre Naude: So what we've seen is, and this is why the fire master concept and the climate come in as well, they are really hungry for solutions that will drive efficiency and help them to operate the bank better. And they need people like us to actually build those tools to be very purpose-built and very narrow in the focus of what solutions or what problems they solve, okay? That way, they feel secure.

Pierre Naude: And so we have to take this journey with them and actually build solutions that are very purpose-driven; they're within a very specific focused problem set. And that's where the industry will come along over time, because, as you can imagine, banking is a conservative business, and it's about money and regulation and compliance. So that's where I saw most of the excitement was the fact that we have the platform in place, but you have to do that first. Get all your business processes right. Get the platform laid out.

Speaker Change #269: It could be a potential uplift just in terms of tax spend more broadly.

Speaker Change #269: But just any higher level conversations that youre, having with either current or prospective customers on that front would be helpful. Thanks.

Speaker Change #270: I think the banks are in a wait and see.

Speaker Change #270: Mode on that.

Speaker Change #271: There clearly is an appetite in some pockets for more banking mergers.

Speaker Change #271: And I think there is a common assumption under the current administration that will be very difficult.

Speaker Change #271: So this is all of that waiting in the wings for the election for the administration foreseeing what's.

Speaker Change #271: What's happening with the FDIC.

Speaker Change #271: So I think.

Speaker Change #271: That's one element, where the bankers are sitting waiting in a year like this year to see what's going to play out but apart from that you know.

Speaker Change #271: When youre inefficient youre inefficient.

Speaker Change #271: If you're behind on your Tech spend you, rather new tech spend and what I'm hearing is that people don't record the same ways in 'twenty.

Speaker Change #271: 2910, 11, and 12, when we started the company, we literally could field of pent up demand of people, who didn't spent and then realize they fell behind and the people to keep up with tech the other winning banks and they attract the best people.

Speaker Change #271: I'm seeing a more of a.

Speaker Change #271: A careful strategic move forward to actually not fall behind.

Speaker Change #272: That's helpful. Thanks.

Mike: Thank you thanks, Mike.

Speaker Change #274: Thank you one moment for questions.

Pierre Naude: And then after that, you can literally start taking those platform steps and compressing them through automation and the usage of data and analytics. And Adam, just on your question about the 100 sales leads, that was specifically for Docbox, which we're now calling our commercial onboarding and deposit account opening solution, but that was specifically at their booth. So a lot of excitement about bringing that technology into the Ncino family. Okay, great. That's really helpful.

Speaker Change #275: Our next.

Speaker Change #276: It comes from Adam <unk> with Bank of America, You May proceed.

Gregory D. Orenstein: And then, Greg, just on the margin consideration there, I think you talked about hiring being a little bit behind schedule. What do you need to see either from a revenue perspective or other signals to lean in on the hiring side? And then, you know, how do we think about, you know, some of the sales and marketing expenses within the context of that relative to the margin expansion plans that you laid out at Investor Day last year?

Gregory D. Orenstein: So from a hiring perspective, again, our folks have got, you know, the green light to hire. I think what we've seen over the last quarter or three is, you know, more and more talent in the market. And I think our teams are being very methodical about who they're hiring and bringing in to help drive the company going forward. So, from that perspective, there's nothing, you know, from the CFO's office, for example. And it's all around making sure we've got the right people who can help drive growth, particularly when we talk about the breadth of products that we have, you know, going forward. So that's that.

Adam: Hey, Thanks for taking my question just to clarify those are all it sounds like customer activity improved in Q1.

Gregory D. Orenstein: You know, as it relates from a margin perspective, again, we're going to take a little bit of a jump in our OPEX lines in the second quarter, as I talked about and gave some reasons. But, you know, once we get beyond that, again, we expect it to be fairly stable as the year progresses. You know, I think we've talked about this in our last column before; we feel very comfortable with the headcount that we've got.

Adam Charles Bergere: Or would you say for the mortgage business in isolation that that ticked down.

Speaker Change #277: Ultimately way and fund the choice to maintain the full year guide.

Speaker Change #278: No I wouldn't say it ticked down again, we signed 15, new logos, including some competitive takeaways.

Speaker Change #278: And again that business still grew.

Speaker Change #278: Almost double digits again in this difficult market and so again I think that positions us incredibly well as we get through this year and beyond.

Speaker Change #278: Ultimately again, we gave guidance a short time ago right at the end of March.

Speaker Change #278: And it may just be a hangover from last year, but again, we're sensitive on the churn side.

Like I said it seems like some of the <unk> closing has settled down a little bit, but we can't say that it's over and it's hard to predict M&A.

Like I said I think we would hope to be on the winning side to the extent that there is any M&A in the AMD space, but.

Speaker Change #278: <unk>.

Speaker Change #278: We just don't know and so again, just trying to be prudent.

And again you saw the over performance on the bottom line and what we did with that and as the year progresses.

Speaker Change #278: We're able to update our guidance.

Speaker Change #279: Well based on the information we've got next time, we speak to you.

Gregory D. Orenstein: We're continuing to add in places where we see opportunities again to drive growth and drive efficiencies. You know, you'll note that our headcount is up, but that's really solely related to the acquisitions that we did and the employees that we bought on from those two transactions. Okay, super helpful.

Speaker Change #280: That's helpful context.

Speaker Change #281: And then as a quick follow up.

Speaker Change #282: Are you able to break out any inorganic contribution to IPO the IPO billings from Doc Fox at all thank you.

Speaker Change #283: Yes no.

Speaker Change #284: Yes, Doug Fox and I'll say the stock Fox just like our mortgage business and also the indirect lending business we have.

Speaker Change #284: Just note that those things are billed on a monthly basis.

Speaker Change #284: And so again from a deferred perspective, youre not going to you're not going to necessarily see it sitting there.

Speaker Change #284: As you think about billings youre not going to see it sitting there as well.

Speaker Change #284: And so we haven't broken those out again those are pretty small pieces of the of the overall <unk> bucket.

Speaker Change #284: Yeah.

Speaker Change #285: Awesome that's helpful. Thank you.

Pierre Naude: Thanks, Pierre. Thanks, Gregory. Thanks, Adam.

Adam: Thanks, Adam.

Operator: Thank you. One moment for questions. Our next question comes from Ryan Tomasello with KVW. You may proceed.

Speaker Change #286: Thank you one moment for questions.

Ryan John Tomasello: Hi everyone, thanks for taking the question. Pierre, last quarter you talked about needing to hit roughly 40% of your annual booking target to hit the guidance for the year. So, you know, just given the strong start to the year, could you provide some context around where that visibility stands today and maybe some of where the puts and takes have been? And, just given the strong bookings performance to start the year, maybe just help us understand the drivers of the maintained top line guide for the year. Yeah, so look, firstly, the first quarter was a continuation of the momentum from the fourth quarter.

Speaker Change #287: Our next question comes from Charles Nabhan with Stephens You May proceed.

Pierre Naude: And that gives us confidence to maintain the guidance. And this is exactly how our market sentiment is expressed at this point. If you look at just further color on the bookings, it was about 60-40 commercial.

Charles Joseph Nabhan: Good afternoon, and thank you for taking my question had a high level strategic question and a quick follow up on.

Charles Joseph Nabhan: On the model.

Charles Joseph Nabhan: The high level on the strategic question one of the themes coming out of insight was the modernization of your API and the.

Charles Joseph Nabhan: The growth in your partner ecosystem. So I was hoping you could touch on that a little bit in terms of.

Charles Joseph Nabhan: The investments you've made in the strategic importance of that channel.

Pierre Naude: And I want to emphasize for all of you that the member, If you look historically at commercial, you look at a workflow solution that we want to cover all the people. That is the breadth. We've taken that breadth and expanded that into small business as well as consumer deposit account opening and now onboarding, okay? So that's how you get users. But now there's a depth issue.

Pierre Naude: And the depth is all about intelligence, data, AI, analytics, and machine learning. And we're literally going to go deeper into the bank and look at very specific roles and see how we can replace them. And that adds tremendous value to the efficiency and the operations of the bank. So we see that commercial customer base as a tremendous asset to drive more automation and to actually get more customer value out of it. So I would say that the first quarter confirmed for me our confidence.

Charles Joseph Nabhan: Yes.

Speaker Change #288: So depending on the market segment, you're in some banks like the one front end some banks want to vote, maybe their own jove AI models interfacing to Encino. Some banks has got big data legs, they want to share with us and we have to integrate with it.

Speaker Change #288: So there's multiple reasons for people want to integrate with Encino as this central platform.

Speaker Change #288: A few years ago, we decided that we're going to have this API strategy and then we're going to eat our own dog food, which means.

Speaker Change #288: The same API as reuse for our consumer front ends our commercial front ends.

Speaker Change #288: It will be exactly the same Apis that we make available to the market.

Speaker Change #288: Moving to Esi's too both through our products.

Speaker Change #288: For instance, in the case of regenerative AI now we.

Speaker Change #288: We will open up that modeling so that <unk> can work with our customers and add more skills.

Speaker Change #289: Our benefit through the banks benefit to the ESI benefit so that this whole ecosystem can proliferate throughout the bank and be everywhere.

Speaker Change #289: That is the whole goal of a platform play that's the whole goal of.

Speaker Change #289: Making available the intelligence and the assets at sitting under the platform and I think thats. Good for Encino. So we feel the direction of open Apis, which by the way you could monetize.

Speaker Change #289: Is a good thing for the company as well as our customers.

Pierre Naude: On the downside, you have to remember, we have to look at churn, and we always have to understand what the churn impact is going to be. And since I haven't seen any cuts in rates, although mortgage is only about 15, 16% of total revenue of the company, it does have an impact. And that mortgage business is still running flat, although we're taking market share all the time because we're growing our mortgage business.

Speaker Change #290: Got it that's helpful and just as a quick follow up on the model you had highlighted some factors that led to the outperformance on.

Speaker Change #291: On operating income, including bad debt lower hiring could you speak to the degree to which those factors are built into the second quarter guide as well as any variables, we get potentially think of us as we move through the year in terms of in terms of expenses.

Pierre Naude: But obviously, it's diluted growth overall because it's growing slightly slower than the rest of the company. So I'd say for right now, we're going to hold what we have, and we'll see how the market develops by mid-year. Yeah, just to expand on that, Ryan, from a mortgage perspective, that business is still growing almost double digits this quarter. Again, the team is continuing to do a great job in a difficult market. We added 15 new logos in the quarter. But it is diluted to growth.

Speaker Change #292: Yes Charles.

Gregory D. Orenstein: And, you know, you would have heard my comments around bad debt, particularly on the IMB side, subsiding a little bit. And so I think what we've seen is somewhat what we experienced mainly last year, a lot of these IMBs, these mortgage lenders who are just shutting their doors. We've seen that, I'd say, you know, slow, you know, still expect some of those to happen, but not with the frequency with which they did maybe last year.

Charles Joseph Nabhan: That was taken into consideration as we looked at Q2 and the rest of the year.

Charles Joseph Nabhan: All of those things we wanted to highlight to you guys appreciated again the over performance what drove it.

Charles Joseph Nabhan: And again, we elaborate I elaborated a little bit further around.

Charles Joseph Nabhan: Would impact specifically Q2, but as you look at our guidance and the updated bottom line guidance that we provided that takes those factors into account.

Speaker Change #293: Got it thank you.

Charles Joseph Nabhan: Thanks Charles.

Thank you.

Speaker Change #294: One moment for questions.

Gregory D. Orenstein: And really, as we think about churn this year, I think I touched upon it on the last call, it's really more around M&A. As you know, you're left with a smaller number of larger, better capitalized IMBs, and some of those are becoming aggressive and taking market share. You know, fortunately, we think many of those are our customers. So we hope that there's opportunities for growth through M&A there. But again, sometimes you end up on the wrong side of a trade.

Speaker Change #295: Our next question comes from Robert <unk> with Macquarie Capital You May proceed.

Gregory D. Orenstein: And so as we think about the guidance, you know, you guys in late March, we gave you that guidance. We want to be prudent as we think about the rest of the year. Great. I appreciate all that color.

Robert: Yes, hi, Thank you Pierre and Greg Harrison I'll, just one quick question because I know, we're running out of time on it wouldn't be a quarter if I didn't ask about.

Robert: Yes.

Speaker Change #296: The pricing shift.

Speaker Change #296: And the momentum that you are getting.

Pierre Naude: And then, you know, just a bigger picture one here, Pierre, as you think about potential catalysts on the horizon driving demand and bookings over maybe the next six to 12 months. I was hoping you could just help us contextualize the importance of the different variables. In play between, you know, some of the more obvious ones like rates, the US presidential election, maybe just the broader urgency that AI is putting on the industry to innovate innovate.

Pierre Naude: How would you rank the importance among those and any other major variables that come to mind as you think about the Bookings Environment over the next, yeah, six to 12 months? The first thing you have to realize is that banks this year operate under a lot more stability and a stable macro environment with the rates being stable. Last year was all about survival. When you have a liquidity crisis, management teams turn all their focus to a very tactical mindset to just survive. This year, I would say they are bruised from that experience.

Speaker Change #296: Given it seems like.

Pierre Naude: But they are carefully moving forward with more strategic options. So what I find is a lot of scrutiny in deals and really making sure that they prioritize their spending in the right places. Fortunately, with what we do, we get prioritized at the top of the list many, many times. However, there is still a posture of conservatism that you can see.

Pierre Naude: Now, what's going to happen as time goes by and the rates stay stable and then start going up, maybe coming down a little bit? And look, when it's cut, it's going to be a quarter point cut. So it's not material in dollar terms, but it's more of a sentiment and a signal to the market. What you'll see is that banks will become more aggressive, realizing they have to run an efficient operation. When you come to the election and the changes in administrations, we started this company under Obama, and we ran it under Trump for four years. We're now under Biden.

Pierre Naude: So these administrations come and go. If it's more compliance-oriented, we've got the tools to solve that for you. If it's more growth-driven, we've got the tools to help you grow. If it's more about profitability and efficiency, we've got the tools to drive automation and help you to become more efficient. But all the bankers know they have to come to an efficiency ratio of around 50, 51 percent. Some of my top banks run around 39, 40 percent.

Speaker Change #296: It's been pretty positive reception.

Speaker Change #297: For a few quarters now.

Speaker Change #298: On the consumer side is there any change to your timetable would you potentially.

Speaker Change #299: Accelerate that.

Speaker Change #299: That shifts.

Speaker Change #299: Away from seats and towards hybrid if you will commence.

Speaker Change #300: Commercial loan.

Speaker Change #301: We have some deals you already do on a platform basis.

Speaker Change #301: That's why we're testing the market so actually sales leader surpassed the capability to apply that new model.

Speaker Change #301: In the meantime, we are working with a consulting firm to really package and price the correct way. So we do it once they're rolled out and don't have to.

Speaker Change #301: Pull it back like my sonar system updated me and I didn't like it so.

Speaker Change #301: So what would we have to do is to be very thoughtful because look by asset size and by solution.

Speaker Change #301: Not only do we have to.

Speaker Change #301: Optimized pricing, we have to make sure there's expansion capabilities, we have to make sure it's competitive in the market and we have to make sure. It makes sense to the customer and how they view pricing in the future.

Speaker Change #301: And to bring all those elements together I'm, rather going to take the next two months to get this finalized and get it right and then.

Speaker Change #301: We will make it very clear on these calls with you all that how that will impact your modeling.

Speaker Change #301: And how is the company's future will look based upon that.

Speaker Change #301: Now I will say I think <unk> know, we are working with third party to help drive.

Speaker Change #301: And as you get into it it's complex, it's much different than just changing our pricing SKU.

Speaker Change #302: On a price list.

Speaker Change #302: So I think we're on track with that I think there is good momentum internally.

Speaker Change #302: To leverage on what we did what we have done a mortgage and consumers. We've previously talked about.

Speaker Change #302: And then again I think it also gives us an opportunity to look at the business a little bit differently in terms of bringing in light of the breadth and depth of the product, bringing different bundles together and pricing them together to really make buying encino much easier.

Speaker Change #302: And much more straightforward.

Speaker Change #303: And that's something that I think our customers will appreciate as well as our sales folks. So I think we're excited about it but to <unk> point, we're going to be very methodical about it make sure we do it right.

Speaker Change #303: Cross every T dot every I and I think we're on track.

Speaker Change #303: In terms of our internal plan to to execute on that.

Speaker Change #304: Alright, Thank you very much Greg.

Greg: Thank you.

Pierre Naude: OK, so you can operate these banks at very efficient and highly profitable margins by utilizing Encino. And that's the message we take away. And that's the message that they confirm for us in our surveys and the feedback we're getting. Great, thanks for taking the question. Thanks, Ryan.

Greg: Okay.

Speaker Change #305: And as a reminder to ask a question. Please press star one on your telephone. Our next question comes from Chris Kennedy with William Blair You May proceed.

Operator: Thank you. One moment for questions. Our next question comes from Brent Bracelin with Piper Sandler. You may proceed. Good afternoon.

Good afternoon. Thanks for taking the question just a quick one any way to think about free cash flow for the rest of the year I know, there's some seasonality here. Thank you.

Brent Alan Bracelin: Appreciate that. Pierre, for you, if I look at DocFox, Allegro, it looks like you're, you know, reinvesting here in that community bank, small business area. What's driving the need or the opportunity? Is there some pull there where you decided to buy versus build because the demand was there?

Pierre Naude: Walk us through the logic and what you're hearing, the sense of urgency from some of those community banks, and why you're leaning in here now. Yeah, so let me talk about onboarding first. Look, onboarding has always been an intrusive hour, but it came in packing order. I wanted to do small business and consumer lending and deposit account opening first. But onboarding for commercial businesses is highly complex, and it literally is as big an effort as these two originate alone. Okay, some of these deposit account openings, because of regulation and money laundering, could take up to six months for them to get the account open, depending on how complex and if it's an international business.

Speaker Change #306: Yeah. Thanks, Chris We don't we don't guide to free cash flow.

Speaker Change #307: We did note that Q1 is historically, our strongest cash flow quarter.

Speaker Change #307: I don't see us tracking any differently in terms of how we have historically in terms of from Q1 throughout the year to Q4.

Speaker Change #307: But yes, otherwise really nothing nothing to note.

Speaker Change #307: Again, obviously, we have been increasing our cash and ultimately that's been allowing us to do things like make these tuck in acquisitions that really can help drive growth and value.

Pierre Naude: So automating that and helping banks with that is a tremendously attractive market. And DocCroft, as you know, we always start building for the community bank market. And with DocCroft, I can accelerate that.

Pierre Naude: And the moment they're fully integrated, that product will go all the way up the enterprise. And so there's a tremendous pool for that. And that, by the way, will then go international and be a global product. So the onboarding of commercial customers, which was always an interest to us, was the natural next step in building out the platform. Then we come to Allegro. Allegro was more of an impediment in the credit union market, where a lot of indirect auto lending happened.

Pierre Naude: Some banks are doing it, and that business falls out of favor and back in favor depending on economic conditions. But credit union markets see it as an essential member service. So they actually have many of these dealers signed up, and you can, like, you know, you go to the dealer, you get the man behind the curtain, and you get your financing. Okay. And that's where the solution is helping them to connect with these dealerships and do that indirectly. And it's a highly complex, deeply integrated solution. And for us to have built that would have added no value.

Pierre Naude: It's more of a commodity, and this product, I see it more as an add-on to consumer lending. So when you go in, you can replace all our new technology with the old stuff they've got. And then I've covered this indirect lending issue that if you don't have that, they cannot select you because then they have multiple vendors. That's where that one came from.

Gregory D. Orenstein: By the way, indirect lending does apply also to credit unions, to banks, and it goes all the way up the enterprise, and it's a U.S.-based product. Yeah, Brent, I think I would also look at that view of the Allegro again as we think about how far our consumer lending solution has come and the confidence we have in it, um, you know, as evidenced by that enterprise bank that we highlighted a quarter or two ago that, um, that purchased it.

Gregory D. Orenstein: I think it's really rounding out the functionality to bring to market. Um, and as Pierre noted, frequently you'd have an RFP where, you know, it's a box we would not be able to check, um, and you'd get, you know, dinged for that.

Gregory D. Orenstein: But ultimately, now we're able to give this, you know, net new technology, and we think the market is asking for it because we don't see other net new technology like what we have on the consumer side out there. Great, helpful color there. And just Greg, for you, one quick follow up on CRPO, the growth did it accelerate here on a year-over-year basis in the quarter? It sounds like you're flagging continued uncertainty in that mortgage market. But was all of the the the the the backlog built here in the quarter tied to some kind of commercial? Was it like strong renewal?

Speaker Change #308: Great. Thanks for taking the question.

Gregory D. Orenstein: Just any additional color on why that CRPO growth actually accelerated even in an arguably very tough environment? Yeah, look, it was a good quarter. And also, just the mix that we had, which we always highlight can impact, you know, RPO, you know, came into play. You know, we talked about the commercial side. You know, we had three commercials. I know we frequently get questions about, you know, commercial saturation.

Gregory D. Orenstein: We had three customers that each expanded with us over 40% from an ACV perspective, just solely expanding their commercial usage of us this quarter. And so we still see plenty of opportunity on the commercial side. You know, the other thing with mixed Brent shows a little bit of the enterprise customers, again, coming back to buy, you know, as the events of last year, the liquidity crisis get further and further in the rearview mirror. So that's another thing that I'd highlight.

Brent Alan Bracelin: Thank you. One moment for questions. Our next question comes from Alex Sklar with Raymond James. You may proceed. Great, thank you, Pierre. Great to hear about the record first quarter bookings. I want to dig into your comments in particular on US tier one and enterprise activity. I think you said it kind of can't start coming back.

Gregory D. Orenstein: And I guess finally, just to echo peers' earlier comments, when we talk about commercial, you know, and again, people talk about commercial lending, we have the historic workflow, commercial lending business that, you know, we started from, but as we think about commercial, and as you guys think about commercial, we really would, you know, urge you or encourage you to think about it more broadly, with all of the other things that we're bringing to those commercial customers, And so as we look at that commercial customer base, again, we view it as a tremendous asset. And we think there's a lot of runway there for it. A lot of cross-sell, for sure. Very clear. Thank you. Thanks, Brent.

Alexander James Sklar: What do you see from that segment in the quarter? And how should we think about that segment contributing to bookings this year relative to its current mix of your business today? What I'm seeing is the same excitement, obviously, there are bigger staffs and a bit more sophistication on the IT side, but the same excitement with the same questions around the usage of AI and data. Remember, if you look at the critical mass of data by banks, you could say that J.B. Morgan Chase and maybe Wells Fargo have got critical mass.

Chris: Thanks, Chris.

Pierre Naude: But the rest of them don't have enough of a loan book to actually have a representative picture of all the areas and states in the U.S. With our data lake, and the products we're building on, and the way we actually anonymize and take these data into a big data lake, and then provide them with much deeper insights into the activities of commercial lending, as well as automate the review processes. You know, we all love to think about commercial loan origination. Most of the work actually consists in quarterly and six monthly and annual reviews of existing loans and making sure the book is priced as well as collateralized and covenanted the right way.

Pierre Naude: So there's a massive back office operation happening without loan origination at all. Okay. And that's where the opportunity to drive this automation and that's where RDC or its data corporations partnership with us is so helpful. I mean, you pair that next to the generative AI tools we're putting together in there, and it's going to literally remove chunks of processes that we've built over 12 years into the workflow.

Pierre Naude: And that's the interesting part here, is that we can now take a broad footprint of what we laid out for a bank, because we know exactly what they do. We can automate some of this and run it a lot more efficiently in a lower-cost operation. And we will share in that efficiency as they pay us for these products. Okay, great. Yeah, I know RDC was a big part of the insight keynote this year. So good to hear them in that color.

Thank you I would now like to turn the call back over to <unk> for any closing remarks.

Pierre Naude: One more for you, Pierre, or Paul's on; I don't know if he's taking part in the Q&A. But can you just talk about the launch of SimpleNexus, the front end, the omni channel capabilities, and maybe I'll just lump in some of the indirect auto functionalities that you talked about in response to Brent's question? What does that mean for the retail lending segment? I know Greg called out that's one of the areas you're going to spend more on in the back half of the year. So what's changed in your mind on consumer lending? Thanks.

Pierre Naude: So let's talk about the consumer facing side of this. Okay. What if American Airlines changed their whole booking operations and issuing tickets, etc., but you still had to make a phone call?

Pierre Naude: You know, years ago, I had to fill out the old stuff. It didn't help you much; it helped them in the middle back office, probably the most sophisticated, elegant front end solution where consumers can now do this stuff and go self-serve. It removes the burden from the bank. It gives them a modern platform.

Pierre Naude: It drives self-service to an extent not known in banking today, okay? So now, all of a sudden, people start believing that all that hard work we did for the middle back office, if you plug that front end in, it drives that consumer adoption and self-service they were always coveting. And that's the difference that this front end is making. It is the final piece of the puzzle, but we never wanted to do it until we've got the middle back office clean. Otherwise, you've got this cool front end, and you wait three days for an answer, okay?

Alexander James Sklar: One moment for questions. Our next question comes from Saket Kalia with Barclays. You may proceed. Okay, great. Hey, guys, thanks for taking my questions here. Pierre, maybe for you just, hey, Pierre, hey, Greg.

Pierre Naude: We are moving to a world where five years from now... I believe consumer and small business banking at the low end should be mostly driven by self-service and intuitive tools that drive intelligence behind the scenes to advise and help consumers to be totally self-service. And it should be so simple, just like your iPhone comes in a box; you don't get a manual, you don't go to a training course.

Saket Kalia: Pierre, maybe maybe for you, I'd like to just double click a little bit on just the consumer business a little bit, you know, to your earlier point, right, like, you know, you're kind of building a whole sort of end to end system there on consumer, maybe we just talk about it from a demand perspective, qualitatively, how do you feel about the pipeline for for for consumer lending this year? And, and as that that tool set has matured, how are you kind of looking at competitive win rates right now? Of course, all all and totally? Yes. So I would remind you that consumer includes indirect lending, mortgage, Consumer finance unsecured. Secured Non-Real Estate.

Pierre Naude: The same is going to happen. We're going to take banking to that same level of efficiency and automation. The Allegra one is just to fill a hole in indirect lending because that's what the market space wants. And if they get this end-to-end solution that can do that as well, they can literally rip out their current disparate systems. They've got between 10 and 15 systems doing all the stuff we do. We can go in with a single platform, elegant front end, totally different self-service. You walk in, you come halfway through your application, walk into the branch, and everything is right there.

Speaker Change #309: Thank you operator, and thank you all for attending today.

Pierre Naude: And then when you get to real estate, it's mortgage plus, elots, etc. Okay. So it's a fairly big bundle.

Pierre Naude: The branch first will pick you up, say, yes, where you left off; I'll finish it for you. So there is lots of excitement around that. And if you hear the feedback we get from some of our largest customers around the mortgage experience, where people literally write them letters to say, I went to take the dog for a walk last night and applied for a mortgage on a very complex product and solution. That's the kind of elegance we want to drive into the market. All right. Thanks for that call. Thank you, Alec.

Pierre Naude: And anyone who's been to Insight, It's actually one of the things I noticed is we've got all these consumer products and they're different booths, and you walk around, and it's actually one big consumer platform. What we are seeing is... The banks have done the commercial piece with us. And now the single platform story is responding.

Pierre Naude: They're beginning to see that not only do we do the investment, All right. And I'll point you to the $15 billion asset bank that grew ACV 7x by signing up with us even without having a commercial on there yet. I'm seeing demand coming. By the way, it's just like the iPhone. On day one, you loved your BlackBerry. I've never seen you using a BlackBerry, but I'm 100% sure you had one

Speaker Change #310: We've always said that customers out of the hardware and seen those mission. So the opportunity to spend three days with customers and partners at the inside earlier this month.

Pierre Naude: Okay. And so it takes people a little bit to say, okay, it's real now. And here's what you have to realize. Banking cannot afford the personal services for products that are unprofitable.

Pierre Naude: That's the simple math in banks today. I meet with many, many CEOs of banks. And that's the most common theme, apart from efficiency, is that we cannot keep on spending time and money with people on products that are unprofitable. So, the automation drive and the efficiency drive are going to do that. So, by the way, the pipeline is healthy, we feel good about it, the customer reference is healthy, and the existing projects where we're installing consumers are healthy. So, I feel overall that as we have more success, that demand will actually go up. Got it. Got it.

Gregory D. Orenstein: That makes a ton of sense. Greg, maybe for my follow-up for you, I'd love to just get your thoughts on the services business right now. You know, strategically, we've talked about in the past how it might be nice to maybe work with more, you know, SI partners there to sort of balance some of the work. And it looks like some of that services mix is going down as just a percentage of total revenue.

Gregory D. Orenstein: Maybe the question is, where are we on that journey, and how do you think about that mix longer term? Saket, I think, you know, that journey just continues as, as is. I think us, as we've talked about pretty consistently, wanting to push services as much as we can to our SI partners continues to be the strategy. And, you know, you may see some lumpiness from time to time based on, you know, projects not going to a partner because maybe they wanted us to do it or go to a partner.

Gregory D. Orenstein: But, you know, ultimately, we think that's a fairly steady-state business, and it provides a lot of value for our customers, whether it's us directly implementing it, supporting the customers, or working with our SI partners. And again, that's how our folks here really learn more and more about the product and get more and more feedback from our customers about the product, which then goes right back into our R&D organization and helps drive, you know, continued innovation.

Gregory D. Orenstein: Projects go better when Ncino has people on them. So we always emphasize, regardless of the size of the bank, even SI is involved, that Ncino should put some people on the project. So, just because the closest to the product people, they come home on weekends, they come home on Fridays, they go talk to the product, they understand how it was built.

Gregory D. Orenstein: And so you'll see the current percentage of revenue will probably continue. We don't de-emphasize services, but we try to keep a nice balance to make sure customer support stays up, and we get product feedback. That makes a lot of sense.

Terrell Frederick Tillman: Thank you. Thank you. Thank you. One moment for questions. Our next question comes from James Fawcett with Morgan Stanley. You may proceed. Hi everyone, it's Michael Infante on behalf of James.

Saket Kalia: Thanks, guys. Thanks, Saket. Thank you. One moment for questions. Our next question comes from Terry Tillman. With two insecurities, he may proceed.

James Eugene Faucette: Thanks for taking our question. Really interesting use cases on the banking advisor front. Pierre, Greg, I was curious, I think you previously mentioned that you weren't expecting any revenue contribution from banking advisor in FY25. Is that still the right way to think about it, despite the product velocity and customer excitement that you guys are seeing? Or do you think we can see some uplift this year?

Terrell Frederick Tillman: Yeah, thanks for taking my questions, Pierre, Greg, and Harrison. Maybe the first question I remember on prior calls is to attempt to do a local language when you have an international win. So whether it's French, or Dutch, or I think maybe one time in New Zealand.

Speaker Change #310: Fuels my excitement about the road ahead.

Gregory D. Orenstein: Yeah, it's still not part of our plan, Michael. You know, and again, I think getting back to thanking advisors, same with Doc Fox, you know, we highlighted what we brought to Ncino, we purchased it again, the focus this year is on making sure we integrate that and really make it fully part of the single platform versus having a separate product. So nothing's changed in either one of those cases at this point in time.

Pierre Naude: You talked about the enterprise business being strong in the US, community banks, and just generally you're seeing that pick up in the US. It seemed like international revenue was strong at 34% year over year growth. But how was it in terms of new business with new logos and or expansion sales with international customers? And then I had a follow-up. Yes, yeah, we had, you can do an English accent.

Gregory D. Orenstein: Got it, and that's helpful. Maybe Pierre, just a high-level strategic question for you and a follow-up on the earlier question, but obviously, there have been some developments just in terms of Basel III's end game. I'm curious, seems like we'll probably get some form of resolution towards the end of this year, but it seems like just in terms of easing capital requirements more broadly, there could be a potential uplift just in terms of tech spend more broadly, but just any higher-level conversations that you're having with either current or prospective customers on that front would be helpful.

Robert C. Trout: Our next question comes from Robert Trout with Macquarie Capital. Yes, I thank you, Pierre, Greg, and Harrison. Just one quick question, because I know we're running out of time.

Pierre Naude: We had a great UK institution that signed up for us that we're proud of. But I would remind you that the international business is more of an enterprise business. So it's lumpy, you know, the pipe is healthy, and we feel good about that. Plus, I'll remind all Americans on the call that Canada is not America.

Gregory D. Orenstein: Thanks. You know, I think the banks are in a wait and see mode. There clearly is an appetite in some pockets for more banking mergers, but I think there's a common assumption under the current administration that it'll be very difficult.

Pierre Naude: It wouldn't be a quarter if I didn't ask about the pricing shift and the momentum that you're getting there. Given what seems like it's been a pretty positive reception for a few quarters now, on the consumer side, is there any change to your timetable? Would you potentially accelerate that shift away from seats and towards hybrid, if you will, on the commercial side?

Pierre Naude: So we've got Canada, you've got the UK, Ireland, and I would say we're very excited about Spain. We've got a nice operation in Spain going, and we realize we've got Spanish banks outside of Spain as customers. And what we're beginning to see since we put a focus on Spain, the Nordics, and around the Netherlands and Belgium, or the Benelux. We are seeing increasing demand in those regions, but specifically Spain, we're very excited about.

Speaker Change #310: We learned so much from our customers they shape, our product roadmap and drive our technology innovation.

Pierre Naude: So there's all of that waiting in the wings for the election, for the administration, for seeing what's happening at the FDIC. So I think... That's one element where the bankers are sitting waiting for a year like this year to see what's going to play out. But apart from that, you know, when you're inefficient, you're inefficient. And if you're behind on your tax spend, you're behind on your tax spend. And what I'm hearing is that people don't want to be caught the same way as in 2009, 10, 11, and 12.

Pierre Naude: We have some deals we already do on a platform basis; that's how we're testing the market. So, actually, sales leadership has the capability to apply that new model as they see fit. In the meantime, we're working with a consulting firm to really package a price the correct way, so we do it once, roll it out, and don't have to... Pull it back like my Sonos system updated me, and I didn't like it.

Pierre Naude: Spain is also the entry point for us into Latin America, with those very large Spanish banks, wanting platforms to do global business with. And so that's an exciting development. And I should also mention that Japan looks very healthy.

Pierre Naude: When we started the company, we literally could feel the pent-up demand of people who didn't spend and then realized they had fallen behind. And the people who keep up with tech are the winning banks, and they attract the best people. So I'm seeing more of a careful strategic move forward to actually not fall behind. That's helpful.

Pierre Naude: So, what we have to do is to be very thoughtful because look by asset size and by solution type. Not only do we have to optimize pricing, we have to make sure there's expansion capabilities, we have to make sure it's competitive in the market, and we have to make sure it makes sense to the customer and how they view pricing in the future. And to bring all those elements together, I'm going to take the next two months to get this finalized and get it right.

Pierre Naude: There are some very exciting developments. As you can imagine, it's a slow moving market as we get more traction and get more references. But we had.

Michael Nicholas Infante: Thanks. Thank you. Thanks, Michael. Thank you. One moment for questions. Our next question comes from Adam Bergere with Bank of America. You may proceed. Hey, thanks for taking my question. Um, just to clarify, overall, it sounds like customer activity improved in Q1. But would you say for the mortgage business in isolation that that had ticked down, and that's ultimately what informed the choice to maintain the full year guide? No, I wouldn't say it was ticked down.

Pierre Naude: And then we will make it very clear on these calls with you all how that will impact your modeling and how the company's future will look based upon that. But I will say, I think to Pierre's note, you know, we are working with third parties to help drive, you know, and as you get into it, it's complex, right? It's much different than just changing a pricing skew, you know, on a price list.

Pierre Naude: Two different institutions from Japan are coming to Insight. I had meetings with them in general. And just exciting developments because of the size and the breadth of what they want to do with us. And Salesforce also has a big presence in Japan, so that's also helpful for us. So I feel good about the international business, but I want to comment. In the short term, because of the addition of Doc Fox and Allegro and the emphasis on going deeper into the current union space and adding sales and marketing there, you may see that the U.S. accelerates growth a little bit, and then the international business will catch up again.

Gregory D. Orenstein: Again, we signed 15 new logos, including some competitive takeaways. And again, that business still grew by almost double digits in this difficult market. And so again, I think that positions us incredibly well, you know, as we get through this year and beyond. But ultimately, we gave guidance a short time ago, right at the end of March. And, you know, it may just be a hangover from last year.

Gregory D. Orenstein: And so I think we're on track with that. I think there's good momentum internally to leverage on what we did, you know, what we did on mortgages and consumers as we've previously talked about. And again, I think it also gives us an opportunity to look at the business a little bit differently in terms of highlighting the breadth and depth of the product, bringing different bundles together and pricing them together to really make buying Ncino much easier and much more straightforward.

Pierre Naude: That does not diminish the size or the opportunity internationally. It just says that over time as we invest because we always start building for the community regionally, then we grow it up, okay? You may see that phenomenon a little bit. Got it. Well, maybe I'll just go ahead and... Give a little bit of Japanese. Konnichiwa, or Ohio gazimus.

Gregory D. Orenstein: But again, we're sensitive on the churn side. Like I said, it seems like some of the IMBs closing have settled down a little bit, but we can't say that it's over. And, like I said, I think we would hope to be on the winning side to the extent that there is any M&A in the IMB space. But, you know, we just don't know.

Gregory D. Orenstein: And that's something that I think our customers will appreciate as well as our sales people. So I think we're excited about it. But to Pierre's point, we're going to be very methodical about it, make sure we do it right, cross every T, dot every I, and I think we're on track in terms of our internal plan to execute on that. Very helpful. Thank you very much, Greg. Thank you. Thank you.

Terrell Frederick Tillman: But so the second question, and then I'll stop for everybody's sake, is on the Nick side. I think 39% of platform customers were using at least one of the solutions at the end of last quarter. I assume that maybe that picks up a little bit. Just anything Greg could share on that. And then, secondly, look, it seemed like after you launched auto spreading, you had a lot of good early wins.

Pierre Naude: Thank you, operator. Thank you all for attending today. We've always said that customers are the heart of Ncino's mission, so the opportunity to spend three days with customers and partners at Insight earlier this month fuels my excitement about the road ahead. We learn so much from our customers. They shape our product roadmap and drive our technological innovation.

Gregory D. Orenstein: And so again, just trying to be prudent. And again, you saw the overperformance on the bottom line and what we did with that. And as the year progresses, you know, we're able to update our guidance, you know, we will. Based on the information we've got next time we speak to you. Awesome, that's helpful context. And as a quick follow-up, are you able to break out any inorganic contribution to RPO and CRPO billings from DocFox at all?

Gregory D. Orenstein: And as a reminder, to ask a question, please press star 11 on your telephone. Our next question comes from Chris Kennedy. William Blair, you may proceed. Good afternoon. Thanks for taking the question. Just a quick one. Any way to think about free cash flow for the rest of the year? I know there's some seasonality here.

Pierre Naude: You know, and I didn't hear a lot about the new auto-distribution deals, but maybe you hadn't, but it does seem like it's a really great efficiency play. So is there still more in the tank, so to speak, in terms of getting more customers to subscribe to that? Thank you. Yes, we do.

Adam Charles Bergere: Yeah, no, you know, Doc Fox, and I'll say this Doc Fox, just like our mortgage business and also the indirect lending business we have. Just note that those things are built on a monthly basis. And so again, from a deferred perspective, you're not going to, you're not necessarily going to see it sitting there. If you think about billings, you're not going to see it sitting there as well.

We are grateful for the trust in us and the opportunity to continue shaping the financial services industry.

Cristopher David Kennedy: Yeah, thanks, Chris. You know, we don't we don't guide free cash flow. You know, we did note that Q1 is historically our strongest cash flow quarter. You know, I don't see us tracking any differently in terms of how we have historically tracked from Q1 throughout the year to Q4.

Pierre Naude: We do see a great interest there. If anybody who was at Insight will remember, I talked about data consumption and the excitement with AI around that. Today, a lot of that technology is based on OCR technologies.

Gregory D. Orenstein: And so we haven't broken those out. Again, those are pretty small pieces of the overall RPO bucket. Awesome, so far. Thank you. Thanks, Adam.

Gregory D. Orenstein: But yeah, otherwise, really nothing, nothing to note. Again, obviously, we have been increasing our cash. And ultimately, that's been allowing us to do things like make these tuck-in acquisitions that really can help drive growth and value. Thanks for taking the question. Thanks, Chris. Thank you. I would now like to turn the call back over to Pierre Naude for any closing remarks.

Pierre Naude: And in the future, it's going to be based on AI with vision capabilities, which is going to give you a 5-9 accuracy rate. And so I think that whole document interstation business is going to change tremendously over the next six to 18 months. Okay. And we have the tech, we have the people building it, and I get personal demos of this stuff. So there's great excitement around how that continuous end-to-end value proposition is playing out. And I think that's going to accelerate that product again. Greg, anything to add? platform.

Charles Joseph Nabhan: Thank you. One moment for questions. Our next question comes from Charles Nabhan with Stevens. You may proceed.

Gregory D. Orenstein: And so, you know, the lines may get blurred a little bit over time as we again continue to expand, you know, broader and broader and deeper and deeper into a financial institution. Okay, thank you. Thank you very much.

Charles Joseph Nabhan: Good afternoon, and thank you for taking my question. I had a high level strategic question and a quick follow up on, on the model. On the high level, on the strategic question, one of the themes coming out of Insight was the modernization of your APIs and your, the growth in your partner ecosystem. So I was hoping you could touch on that a little bit, in terms of the investments you've made and the strategic importance of that channel. Yes.

We are grateful for their trust in us and the opportunity to continue shaping the financial services industry. And, as always, I appreciate the hard work and loyalty of the global Ncino team. After another quarter of solid execution, I'm excited for your continued efforts as we work together to accelerate the digital transformation of financial institutions around the world. Thank you all. Talk to you later. Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.

Pierre Naude: You know, depending on the market segment you're in, some banks like their own front end, some banks want to build maybe their own AI models interfacing with Ncino, some banks have got big data links they want to share with us, and we have to integrate with it. So there are multiple reasons for people who want to integrate with Ncino as this central platform. And a few years ago, we decided that we're going to have this API strategy, and then we're going to eat our own dark fruit, which means the same APIs we use for our consumer front ends, our commercial front ends, will all be exactly the same APIs that we make available to the market, including to SIs to build into our products.

Pierre Naude: For instance, in the case of generative AI now, we will open up that modeling so that SIs can work with our customers and add more skills. That's our benefit. It's the bank's benefit to the S.I.'s benefit, so that this whole ecosystem could proliferate throughout the bank and be everywhere. That is the whole goal of a platform play.

Speaker Change #310: And as always I appreciate the hard work and loyalty of the global Encino team.

Pierre Naude: That's the whole goal of making available the intelligence and the assets that are sitting under the platform. And I think that's good for Ncino. So we feel the direction of open APIs, which, by the way, you could monetize, is a good thing for the company as well as our customers. Got it. That's helpful.

Gregory D. Orenstein: And just as a quick follow-up on the model, you highlighted some factors that led to the outperformance on operating income, including bad debt, and lower hiring. Could you speak to the degree to which those factors are built into the second quarter guide as well as any variables we could potentially think of as we move through the year in terms of expenses? Yeah, Charles, you know, that was taken into consideration as we looked at Q2 and the rest of the year. You know, all those things we wanted to highlight. So you guys appreciated, again, the overperformance and what drove it.

Gregory D. Orenstein: And again, we elaborate, elaborate a little bit further around what would impact specifically Q2. But as you look at our guidance and the updated bottom line guidance that we provided that takes those factors into account. Got it.

Charles Joseph Nabhan: Thank you. Thanks, Charles. Thank you. One moment for questions.

Speaker Change #310: After another quarter of solid execution I am excited for your continued efforts as we work together to accelerate the digital transfusion, while financial institutions around the world.

Speaker Change #310: You all structure later.

Speaker Change #311: Thank you. This concludes the conference. Thank you for your participation you may now disconnect.