[deepGem]

I doubt it. If you look at nCino S1, their professional services revenues are not growing as much as their subscription revenues.

PS revenues: 2018 20,094 2019 27,076 ~35% 2020 34,915 ~27%

While subscription revenues almost double every year since 2018. This is also highlighted in their risk factors.

What this indicates is that the deployment of such software still needs significant human touch.

Based on the services revenues and the sales expenses, I am hazarding a guess that nCino is a high touch businesses requiring significant sales professionals.

Which is why, it is key to understand customer retention in such businesses. From what I see, they have a 147% subscription revenue retention rate. That might be a proxy to customer retention but I'll try to get their actual customer retention numbers to be on the safer side.

Overall, yes this is no Facebook or Google. The risk section of S1 is very good and the founders are pretty candid about what the investors are up for.

[otoburb]

Two comments about the PS revenue numbers:

1) The growing divergence between the subscription and PS revenues strongly imply that a "land & expand" model is prevelant (2018 1.9x, 2019 2.3x, 2020 2.95x) where they are able to push subscriptions up 21-28% post-deployment.

2) PS margins were 9%-10% in 2018 and 2019, and then dropped to 5.4% in 2020. Good to know that management continues to view PS as a sales enabler that pays for itself (i.e. break even or at least single-digit margin) executing their primary mission to drive high-margin subscriptions.

[deepGem]

Valid points. Land and expand is a great moat to have. Couple of other interesting points

Their contracts are non-cancellable 3 to 5 year contracts. So retention is almost guaranteed and in banks, beyond 5 years no one bothers to change the status quo. So this is a significant factor when it comes to predicting future revenue potential and profit potential.

On the costs front, hey have to pay a part of the subscription revenue to Salesforce. However, this cost grows linearly in proportion to revenue. The ratio has remained same throughout 3:1 (almost)

[amcoastal]

I was dating someone who worked at nCino as a support engineer, they absolutely are keeping most of their customer base by just providing tech support help to the managers at the banks that have problems clicking shortcuts. It's not too unsimilar to a company like ESRI, except their product is built on Salesforce and not nearly as widely needed as Arc.