nCino, Inc. (NCNO) stock intrinsic value fair value estimate & owner earnings analysis

nCino sells cloud software to banks, credit unions and mortgage lenders, chiefly the nCino Platform for loan origination, account opening and related workflows, plus mortgage software from its 2022 SimpleNexus acquisition, and services. Fiscal 2026 (year to January 31, 2026) revenue was $595 million, up 10%. About 78% of sales are in the United States and the United Kingdom is the second largest market. No customer is more than 10% of revenue. Contracted future revenue was $1.3 billion at January 31, 2026, up from $1.2 billion a year earlier, and about 94% of it is scheduled to be recognized within four years. How we measure earnings. Our starting point is cash from operations, minus swings in working capital (receivables, deferred revenue, payables, accruals), minus stock-based compensation, minus the part of capital spending needed just to stand still. Stock pay is the swing factor. nCino paid its staff $74 million in shares in fiscal 2026, and once that is treated as a real cost, owner earnings were only about $16 million ($0.14 per share). The comparable figures were roughly break-even in fiscal 2024 and 2025, and clearly negative in fiscal 2020 through 2023 while the company was scaling and integrating SimpleNexus. We also add back the roughly $16 million of cash interest, because we value the business before its lenders and subtract the debt separately. That gives business cash flow of about $32 million in fiscal 2026, against about $7 million in fiscal 2025 and $4 million in fiscal 2024. Commissions paid to win contracts (about $25 million in fiscal 2026) and lease payments are treated as real operating costs. Amortization of acquired intangibles is added back automatically; since it is a sunk purchase cost, we did not reduce earnings for it, and we credit no growth that depends on further acquisitions. Where we anchored. The stored series is too short and too uneven to use a mechanical median, because the earlier years describe a much smaller, loss-making business that had not yet integrated SimpleNexus. We anchored the base and bull cases on fiscal 2026 business cash flow of $32 million. That step-up is corroborated by the first half of fiscal 2027, in which operating cash flow was $115.6 million versus $72.1 million a year earlier and net income was $18.7 million versus a $9.7 million loss. The bear case does not accept it: it uses $19 million, the midpoint of fiscal 2025 and fiscal 2026. Growth. Last year business cash flow rose sharply from a very small base. For the base case, year 1 growth of 10% is above what a steady business would earn but is backed by dated facts: the first half of fiscal 2027 is already reported and shows strong improvement, and contracted future revenue grew about 8%. We then credit 5% a year through year 5 and 3% through year 10, below both contracted-revenue growth and recent revenue growth of 10 to 13%. We credit no margin expansion, no new-product or market-share gains and no further acquisitions. After year 10 we hold earnings flat for another ten years, because bank customers are locked in by multi-year contracts and heavy integration, and then assume nothing, because nothing beyond that is evidenced. Debt. nCino owes $275 million ($200 million of term loan taken in March 2026, plus revolver draws), both maturing October 28, 2029, at about 5.7%, close to our 6% rate, so we made no adjustment. It used part of the loan for a $100 million accelerated share repurchase, and it spent $217 million and $50 million on acquisitions in fiscal 2025 and 2026. We treated about $40 million of the $83 million of cash as operating cash and the rest as available to repay debt, and subtracted a $12.7 million minority interest in the Japanese subsidiary. Net obligations are about $245 million, or roughly $2.32 per share on 105.4 million diluted shares. An earn-out of up to $10 million on the Sandbox Banking acquisition is not included. Base case: $2.55 per share. The business is worth about $514 million, less $245 million owed, leaving $269 million. Bull case: $3.69 per share. Growth continues at 20% in year 1, 8% through year 5 and 4% through year 10, matching the first-half fiscal 2027 improvement and contracted-revenue growth, then flat for ten years. The business is worth about $634 million, less $245 million owed, leaving $389 million. Bear case: negative $1.37 per share. Cash flow settles at $19 million, and with mortgage software revenue of about $80 million a year exposed to lending volumes and stock pay continuing to absorb the gains, earnings stay flat for four years, which is the span of contracted revenue, and then fade to zero by year 10 as customers renew on worse terms. The business is worth about $100 million, against $245 million owed, so on these assumptions the company owes about $145 million more than it is worth. The debt falls due in October 2029, when refinancing in this case would be difficult, so shareholders would be wiped out or heavily diluted. What could prove this wrong. If the fiscal 2027 improvement continues to widen while stock pay stays near $70 to $75 million, business cash flow could be well above $32 million and even our bull case would be too low. If instead stock pay keeps growing with revenue, or bank technology spending softens, the improvement could reverse. The value is very sensitive to stock pay: at nearly 12% of revenue it is the main reason a $595 million revenue company shows so little owner earnings. We could not reconcile the fiscal 2026 net income figure reported per share to the total including minority interests without the full statement; we relied on the cash flow statement throughout.