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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 2020
OR
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __to __
Commission File Number: 001-39380

nCino, Inc.
(Exact name of Registrant as specified in its charter)
Delaware46-4353148
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
6770 Parker Farm Drive
Wilmington, North Carolina 28405
(Address of principal executive offices including zip code)

(888) 676-2466
(Registrant’s telephone number, including area code)

Securities Registered Pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.0005 per shareNCNONASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer
Accelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 92,294,563 shares of common stock, $0.0005 par value per share, as of November 30, 2020.



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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements that are based on our beliefs and assumptions and on information currently available to us. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies and plans, trends, market sizing, competitive position, industry environment, potential growth opportunities and product capabilities, among other things. Forward-looking statements include all statements that are not historical facts and, in some cases, can be identified by terms such as “aim,” “anticipates,” “believes,” “could,” “estimates,” “expects,” “goal,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “seeks,” “should,” “strive,” “will,” “would,” or similar expressions and the negatives of those terms.
Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including those described in “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this report. Given these uncertainties, you should not place undue reliance on these forward-looking statements.
Any forward-looking statement made by us in this report speaks only as of the date on which it is made. Except as required by law, we disclaim any obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
As used in this report, the terms “nCino,” the “Company,” “Registrant,” “we,” “us,” and “our” mean nCino, Inc. and its subsidiaries unless the context indicates otherwise.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
nCino, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
January 31, 2020October 31, 2020
(Unaudited)
Assets
Current Assets
Cash and cash equivalents (VIE: $8,892 and $8,195 at January 31, 2020 and October 31, 2020, respectively)
$91,184 $378,584 
Accounts receivable, less allowance for doubtful accounts of $0 and $342 at January 31, 2020 and October 31, 2020, respectively
34,205 25,350 
Accounts receivable, related parties9,201  
Costs capitalized to obtain revenue contracts, current portion, net3,608 4,019 
Prepaid expenses and other current assets7,079 9,571 
Total current assets145,277 417,524 
Property and equipment, net13,477 14,307 
Costs capitalized to obtain revenue contracts, noncurrent, net7,000 7,608 
Goodwill55,840 56,298 
Intangible assets, net26,093 23,790 
Other long-term assets2,464 869 
Total assets$250,151 $520,396 
Liabilities, Redeemable Non-Controlling Interest, and Stockholders’ Equity
Current Liabilities
Accounts payable$1,258 $2,354 
Accounts payable, related parties3,408 4,100 
Accrued commissions7,862 5,237 
Other accrued expenses4,922 5,527 
Deferred rent, current portion183 204 
Deferred revenue, current portion50,929 68,634 
Deferred revenue, current portion, related parties8,013  
Total current liabilities76,575 86,056 
Deferred income taxes, noncurrent194 290 
Deferred rent, noncurrent1,558 1,426 
Deferred revenue, noncurrent 1,741 
Other long-term liabilities195  
Total liabilities78,522 89,513 
Commitments and Contingencies (Notes 8, 11 and 12)
Redeemable non-controlling interest (Note 3)4,356 4,166 
Stockholders’ Equity
Preferred stock, $0.001 par value; 1,000,000 and 10,000,000 shares authorized as of January 31, 2020 and October 31, 2020, respectively; and none issued and outstanding as of January 31, 2020 and October 31, 2020, respectively
  
Common stock, $0.0005 par value; 0 and 500,000,000 shares authorized as of January 31, 2020 and October 31, 2020, respectively; 0 and 91,959,276 shares issued and outstanding as of January 31, 2020 and October 31, 2020, respectively
— 46 
Voting common stock, $0.0005 par value; 99,708,247 and 0 shares authorized as of January 31, 2020 and October 31, 2020, respectively; 75,596,007 and 0 shares issued and outstanding as of January 31, 2020 and October 31, 2020, respectively
38 — 
Non-voting common stock, $0.0005 par value; 10,291,753 and 0 shares authorized as of January 31, 2020 and October 31, 2020, respectively; 5,931,319 and 0 shares issued and outstanding as of January 31, 2020 and October 31, 2020, respectively
3 — 
Additional paid-in capital288,564 575,529 
Accumulated other comprehensive (loss) income(408)201 
Accumulated deficit(120,924)(149,059)
Total stockholders’ equity167,273 426,717 
Total liabilities, redeemable non-controlling interest, and stockholders’ equity
$250,151 $520,396 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1

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nCino, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended October 31,Nine Months Ended October 31,
2019202020192020
Revenues
Subscription (related parties $1,904, $0, $5,771 and $2,439, respectively)
$27,673 $43,279 $71,815 $117,461 
Professional services10,189 10,950 27,861 30,245 
Total revenues37,862 54,229 99,676 147,706 
Cost of Revenues
Subscription1 (related party $5,826, $9,067, $16,246 and $25,277, respectively)
8,243 12,380 21,828 34,399 
Professional services1
8,646 10,134 23,869 29,568 
Total cost of revenues16,889 22,514 45,697 63,967 
Gross profit20,973 31,715 53,979 83,739 
Operating Expenses
Sales and marketing1
12,602 14,175 31,070 42,027 
Research and development1
9,534 15,077 25,172 41,334 
General and administrative1
5,557 11,251 15,896 29,130 
Total operating expenses27,693 40,503 72,138 112,491 
Loss from operations(6,720)(8,788)(18,159)(28,752)
Non-operating Income (Expense)
Interest income99 78 682 289 
Other690 (260)(37)337 
Loss before income tax expense(5,931)(8,970)(17,514)(28,126)
Income tax expense158 309 496 709 
Net loss(6,089)(9,279)(18,010)(28,835)
Net loss attributable to redeemable non-controlling interest (Note 3)(60)(292)(60)(700)
Adjustment attributable to redeemable non-controlling interest (Note 3) 76  343 
Net loss attributable to nCino, Inc.$(6,029)$(9,063)$(17,950)$(28,478)
Net loss per share attributable to nCino, Inc.:
Basic and diluted$(0.08)$(0.10)$(0.23)$(0.33)
Weighted average number of common shares outstanding:
Basic and diluted79,382,419 91,600,203 77,277,039 85,962,141 
1Includes stock-based compensation expense as follows:
Three Months Ended October 31,Nine Months Ended October 31,
2019202020192020
Cost of subscription revenues$71 $135 $208 $438 
Cost of professional services revenues315 810 938 3,358 
Sales and marketing339 1,157 946 4,818 
Research and development315 1,066 926 4,406 
General and administrative41 2,125 1,664 6,593 
Total stock-based compensation expense$1,081 $5,293 $4,682 $19,613 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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nCino, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)
Three Months Ended October 31,Nine Months Ended October 31,
2019202020192020
Net loss$(6,089)$(9,279)$(18,010)$(28,835)
Other comprehensive income (loss):
Foreign currency translation(366)(3)83 776 
Other comprehensive income (loss)(366)(3)83 776 
Comprehensive loss(6,455)(9,282)(17,927)(28,059)
Less comprehensive loss attributable to redeemable non-controlling interest:
Net loss attributable to redeemable non-controlling interest(60)(292)(60)(700)
Foreign currency translation attributable to redeemable non-controlling interest10 (2)10 167 
Comprehensive loss attributable to redeemable non-controlling interest(50)(294)(50)(533)
Comprehensive loss attributable to nCino, Inc.$(6,405)$(8,988)$(17,877)$(27,526)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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nCino, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share data)
(Unaudited)
Three Months Ended October 31, 2019
Voting
Common Stock
Non-voting
Common Stock
Additional
Paid-in
Capital
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
SharesAmountSharesAmount
Balance, July 31, 201971,813,095 $36 5,701,435 $3 $198,720 $428 $(105,251)$93,936 
Stock issuance, net of issuance costs of $52
3,448,276 2 229,885 — 79,946 — — 79,948 
Stock issuance related to business combinations
63,967 — — — 1,392 — — 1,392 
Contingent consideration related to business combinations— — — — 5,857 — — 5,857 
Exercise of stock options110,032 — — — 203 — — 203 
Stock-based compensation— — — — 1,081 — — 1,081 
Other comprehensive loss— — — — — (376)— (376)
Net loss attributable to nCino, Inc.— — — — — — (6,029)(6,029)
Balance, October 31, 201975,435,370 $38 5,931,320 $3 $287,199 $52 $(111,280)$176,012 
Three Months Ended October 31, 2020
Common StockAdditional
Paid-in
Capital
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
SharesAmount
Balance, July 31, 202091,122,356 $46 $567,314 $202 $(140,072)$427,490 
Exercise of stock options836,920 — 2,998 — — 2,998 
Stock-based compensation— — 5,293 — — 5,293 
Other comprehensive loss— — — (1)— (1)
Net loss attributable to nCino, Inc., including adjustment to redeemable non-controlling interest
— — (76)— (8,987)(9,063)
Balance, October 31, 202091,959,276 $46 $575,529 $201 $(149,059)$426,717 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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nCino, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share data)
(Unaudited)
Nine Months Ended October 31, 2019
Voting
Common Stock
Non-voting
Common Stock
Additional
Paid-in
Capital
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
SharesAmountSharesAmount
Balance, January 31, 201970,186,189 $35 5,701,435 $3 $170,771 $(21)$(104,752)$66,036 
Cumulative-effect adjustment from adoption of accounting standard
— — — — — — 11,422 11,422 
Stock issuance, net of issuance costs of $52
3,448,276 2 229,885 — 79,946 — — 79,948 
Stock issuance related to business combinations
1,502,772 1 — — 25,203 — — 25,204 
Contingent consideration related to business combinations— — — — 5,857 — — 5,857 
Exercise of stock options298,133 — — — 740 — — 740 
Stock-based compensation— — — — 4,682 — — 4,682 
Other comprehensive income— — — — — 73 — 73 
Net loss attributable to nCino, Inc.— — — — — — (17,950)(17,950)
Balance, October 31, 201975,435,370 $38 5,931,320 $3 $287,199 $52 $(111,280)$176,012 
Nine Months Ended October 31, 2020
Common StockVoting
Common Stock
Non-voting
Common Stock
Additional
Paid-in
Capital
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
SharesAmountSharesAmountSharesAmount
Balance, January 31, 2020 $ 75,596,007 $38 5,931,319 $3 $288,564 $(408)$(120,924)$167,273 
Issuance of common stock in connection with initial public offering, net of underwriting discounts and commissions
9,269,000 5 — — — — 268,370 — — 268,375 
Costs in connection with initial public offering
— — — — — (4,534)— — (4,534)
Exercise of stock options837,420 — 325,530 — — — 3,859 — — 3,859 
Reclassification of voting and non-voting common stock
81,852,856 41 (75,921,537)(38)(5,931,319)(3)— — — — 
Stock-based compensation— — — — — — 19,613 — — 19,613 
Other comprehensive income— — — — — — — 609 — 609 
Net loss attributable to nCino, Inc., including adjustment to redeemable non-controlling interest
— — — — — — (343)— (28,135)(28,478)
Balance, October 31, 202091,959,276 $46  $  $ $575,529 $201 $(149,059)$426,717 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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nCino, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended October 31,
20192020
Cash Flows from Operating Activities
Net loss attributable to nCino, Inc.$(17,950)$(28,478)
Net loss and adjustment attributable to redeemable non-controlling interest(60)(357)
Net loss(18,010)(28,835)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization2,894 5,425 
Amortization of costs capitalized to obtain revenue contracts2,351 3,521 
Stock-based compensation4,682 19,613 
Deferred income taxes119 96 
Provision for (recovery of) bad debt(105)342 
Change in operating assets and liabilities:
Accounts receivable4,716 8,535 
Accounts receivable, related parties4,318 9,201 
Costs capitalized to obtain revenue contracts(2,416)(4,531)
Prepaid expenses and other assets104 (2,652)
Accounts payable and accrued expenses and other liabilities(2,196)(1,551)
Accounts payable, related parties546 692 
Deferred rent1,074 (109)
Deferred revenue9,768 19,413 
Deferred revenue, related parties(5,675)(8,013)
Net cash provided by operating activities2,170 21,147 
Cash Flows from Investing Activities
Acquisition of business, net of cash acquired(52,267) 
Purchases of property and equipment(3,374)(3,755)
Net cash used in investing activities(55,641)(3,755)
Cash Flows from Financing Activities
Proceeds from initial public offering, net of underwriting discounts and commissions 268,375 
Payments of costs related to initial public offering (2,524)
Investment from redeemable non-controlling interest4,513  
Proceeds from stock issuance80,000  
Stock issuance costs(52) 
Payments of deferred costs(44) 
Exercise of stock options740 3,859 
Net cash provided by financing activities85,157 269,710 
Effect of foreign currency exchange rate changes on cash and cash equivalents(84)298 
Net increase in cash and cash equivalents31,602 287,400 
Cash and Cash Equivalents, beginning of period74,347 91,184 
Cash and Cash Equivalents, end of period$105,949 $378,584 
Supplemental disclosure of cash flow information
Cash paid during the year for taxes, net of refunds$313 $587 
Supplemental disclosure of noncash investing and financing activities
Purchase of property and equipment, accrued but not paid$316 $116 
Fair value of common stock issued as consideration for business acquisition$25,204 $ 
Costs related to initial public offering, accrued but not paid$ $241 
Costs related to initial public offering, reclassified from other long term assets to equity$ $1,769 
Fair value of contingent consideration in connection with business acquisition in other long-term liabilities$197 $ 
Fair value of contingent consideration in connection with business acquisition included in equity$5,857 $ 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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nCino, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts and unless otherwise indicated)

Note 1. Organization and Description of Business
Description of Business: nCino, Inc. is a software-as-a-service (SaaS) company that provides software applications to financial institutions to streamline employee and client interactions. The Company is headquartered in Wilmington, North Carolina and has offices in Salt Lake City, Utah; London, United Kingdom; Sydney, Australia; Melbourne, Australia; Toronto, Canada; and Tokyo, Japan.
Initial Public Offering: On July 13, 2020, the Company's Registration Statement on Form S-1 relating to the initial public offering ("IPO") of its common stock was declared effective by the Securities and Exchange Commission ("SEC"). Prior to the closing of the IPO, the Company's certificate of incorporation was amended such that all outstanding shares of voting common stock and non-voting common stock were reclassified into a single class of stock designated as common stock which has one vote per share. In addition, effective upon the closing of the IPO, the Company's certificate of incorporation was amended and restated such that the total number of shares of common stock authorized to issue, par value $0.0005, was increased to 500,000,000 shares and the total number of shares of preferred stock authorized to issue, par value $0.001, was increased to 10,000,000 shares. In connection with the IPO, the Company issued and sold 9,269,000 shares of common stock (including shares issued pursuant to the exercise in full of the underwriters' option to purchase additional shares) at a public offering price of $31.00 per share for net proceeds of $268.4 million, after deducting underwriters' discounts and commissions (excluding other IPO costs as of October 31, 2020).
Prior to the IPO, deferred offering costs, which consist of legal, accounting, consulting and other direct fees and costs relating to the IPO, were capitalized in other long-term assets. Upon consummation of the IPO, these costs were offset against the proceeds from the IPO and recorded in additional paid-in capital.
Secondary Public Offering: On October 13, 2020, the Company completed an underwritten secondary public offering of 7,712,985 shares of common stock (including shares issued pursuant to the exercise in full of the underwriters' option to purchase additional shares) (the "Secondary Offering") held by certain stockholders of the Company (the "Selling Stockholders"). The Company did not offer any shares of common stock in the Secondary Offering and did not receive any proceeds from the sale of the shares of common stock by the Selling Stockholders. The Company incurred costs of $1.0 million in relation to the Secondary Offering for the three and nine months ended October 31, 2020 and such costs are recorded as a component of general and administrative expenses on the unaudited condensed consolidated statement of operations. The Company received $1.7 million in cash (excluding withholding taxes) in connection with the exercise of 554,112 options by certain stockholders participating in this Secondary Offering. In addition, concurrent with the pricing of the Secondary Offering, the underwriters in the Company's IPO released an additional 367,561 shares from lock-up agreements, signed in connection with the IPO, with stockholders who did not participate in the Secondary Offering. The release consisted of both outstanding shares and shares subject to options.
Fiscal Year End: The Company’s fiscal year ends on January 31.
Note 2. Summary of Significant Accounting Policies
Principles of Consolidation and Basis of Presentation: The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) as set forth in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and applicable rules and regulations of the SEC regarding interim financial reporting. Certain information and disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included for the Company’s audited January 31, 2020 consolidated financial statements contained in the Company's final prospectus for the Secondary Offering dated October 7, 2020 and filed with the SEC pursuant to Rule 424(b)(4) on October 9, 2020. The unaudited condensed consolidated financial statements include accounts of the Company’s wholly-owned subsidiaries, as well as a variable interest entity in which the

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nCino, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts and unless otherwise indicated)
Company is the primary beneficiary. All intercompany accounts and transactions are eliminated. Refer to the variable interest entity section below and Note 3 for additional information regarding the Company’s variable interest entity.
The Company is subject to the normal risks associated with technology companies that have not demonstrated sustainable income from operations, including product development, the risk of customer acceptance and market penetration of its products and services and, ultimately, the need to attain profitability to generate positive cash resources.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal year 2021 or any future period.
Variable Interest Entity: The Company holds an interest in a Japanese company (“nCino K.K.”) that is considered a variable interest entity or VIE. nCino K.K. is considered a VIE as it has insufficient equity capital to finance its activities without additional financial support. The Company is the primary beneficiary of nCino K.K. as it has the power over the activities that most significantly impact the economic performance of nCino K.K. and has the obligation to absorb expected losses and the right to receive expected benefits that could be significant to nCino K.K., in accordance with accounting guidance. As a result, the Company consolidated nCino K.K. and all significant intercompany accounts have been eliminated. The Company will continue to assess whether it has a controlling financial interest and whether it is the primary beneficiary at each reporting period. Other than the Company’s equity investment, the Company has not provided financial or other support to nCino K.K. that it was not contractually obligated to provide. The assets of the VIE can only be used to settle the obligations of the VIE and the creditors of the VIE do not have recourse to the Company. The assets and liabilities of the VIE were not significant to the Company’s consolidated financial statements except for cash which is reflected on the unaudited condensed consolidated balance sheets. Refer to Note 3 for additional information regarding the Company’s variable interest.
Redeemable Non-Controlling Interest: Redeemable non-controlling interest relates to minority investors of nCino K.K. An agreement with the minority investors of nCino K.K. contains redemption features whereby the interest held by the minority investors are redeemable either at the option of the (i) minority investors or (ii) the Company, both beginning on the eighth anniversary of the initial capital contribution. If the interest of the minority investors were to be redeemed under this agreement, the Company would be required to redeem the interest based on a prescribed formula derived from the relative revenues of nCino K.K. and the Company. The balance of the redeemable non-controlling interest is reported at the greater of the initial carrying amount adjusted for the redeemable non-controlling interest’s share of earnings or losses and other comprehensive income or loss, or its estimated redemption value. The resulting changes in the estimated redemption amount (increases or decreases) are recorded with corresponding adjustments against retained earnings or, in the absence of retained earnings, additional paid-in-capital. These interests are presented on the unaudited condensed consolidated balance sheets outside of equity under the caption “Redeemable non-controlling interest.”
Use of Estimates: The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions made by the Company’s management are used for, but not limited to, revenue recognition including determining the nature and timing of satisfaction of performance obligations, variable consideration, stand-alone selling price, and other revenue items requiring significant judgement; the average period of benefit associated with costs capitalized to obtain revenue contracts; fair value of assets acquired and liabilities assumed for business combinations; fair value of contingent consideration; the useful lives of intangible assets; the valuation allowance on deferred tax assets; redemption value of redeemable non-controlling interest and stock-based compensation. The Company assesses these estimates on a regular basis using historical experience and other factors. Actual results could differ from these estimates.
Concentration of Credit Risk and Significant Customers: The Company’s financial instruments that are exposed to concentration of credit risk consist primarily of cash and cash equivalents. The Company’s cash and cash equivalents exceeded the Federal deposit insurance limit at January 31, 2020 and October 31, 2020. The Company maintains its cash and cash equivalents with high-credit-quality financial institutions.

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nCino, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts and unless otherwise indicated)
As of January 31, 2020, two customers represented 22% of accounts receivable, 11% of which was from a customer who is an equity holder. In the quarter ended July 31, 2020, the equity holder ceased to qualify as a related party of the Company and the amounts disclosed related to such equity holder are accordingly presented as a related party through April 30, 2020, only. As of October 31, 2020, one customer represented 16% of accounts receivable. For the three and nine months ended October 31, 2019 and 2020, no individual customer represented more than 10% of the Company’s total revenues.
Accounts Receivable and Allowances: A receivable is recorded when an unconditional right to invoice and receive payment exists, such that only the passage of time is required before payment of consideration is due. Timing of revenue recognition may differ from the timing of invoicing to customers. Certain performance obligations may require payment before delivery of the service to the customer. We recognize a contract asset in the form of accounts receivable when we have an unconditional right to payment, and we record a contract asset in the form of unbilled accounts receivable when revenues earned on a contract exceeds the billings. The Company’s standard billing terms are annual in advance. An unbilled accounts receivable is a contract asset related to the delivery of the Company’s subscription services and professional services for which the related billings will occur in a future period. Unbilled accounts receivable consists of (i) revenues recognized for professional services performed but not yet billed and (ii) revenues recognized from non-cancelable, multi-year orders in which fees increase annually but for which we are not contractually able to invoice until a future period. Accounts receivable are reported at their gross outstanding balance reduced by an allowance for estimated receivable losses.
The Company records allowances for doubtful accounts based upon the credit worthiness of customers, historical experience, the age of the accounts receivable and current market and economic conditions.
A summary of activity in the allowance for doubtful accounts is as follows:
Three Months Ended
October 31,
Nine Months Ended
October 31,
2019202020192020
Balance, beginning of period$ $622 $123 $ 
Charged to (recovery of) bad debt expense (277)(105)342 
Write off of uncollectible accounts  (18) 
Translation adjustments (3)  
Balance, end of period$ $342 $ $342 
Recently Adopted Accounting Guidance:
In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates certain disclosure requirements for fair value measurements for all entities, requires public entities to disclose certain new information and modifies some disclosure requirements. ASU 2018-13 is effective for all entities for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years, and early adoption is permitted. An entity is permitted to early adopt either the entire standard or only the provisions that eliminate or modify requirements. The Company adopted the standard effective February 1, 2020. The adoption of this standard did not have a material impact on the Company’s unaudited condensed consolidated financial statements.
In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. This standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. ASU 2018-15 is effective for emerging growth companies following private company adoption dates in fiscal years beginning after December 15, 2019, and interim periods within annual periods beginning after December 15, 2020, with early adoption permitted. The Company prospectively adopted the standard effective February 1, 2020. The adoption of this standard did not have a material impact on the Company’s unaudited condensed consolidated financial statements.
In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810), Targeted Improvements to Related Party Guidance for Variable Interest Entities, which addresses the cost and complexity of financial reporting associated with

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nCino, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts and unless otherwise indicated)
consolidation of variable interest entities (“VIE”). ASU 2018-17 is effective for emerging growth companies following private company adoption dates in fiscal years beginning after December 15, 2019, and interim periods within annual periods beginning after December 15, 2020, with early adoption permitted. The new guidance must be applied on a retrospective basis as a cumulative-effect adjustment as of the date of adoption. The adoption of this standard did not impact the Company’s unaudited condensed consolidated financial statements or related disclosures upon adoption, because the Company did not, and currently does not, have any indirect interests through related parties under common control for which it receives decision-making fees.
Recent Accounting Pronouncements Not Yet Adopted:
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The standard will affect all entities that lease assets and will require lessees to recognize a lease liability and a right-of-use asset for all leases (except for short-term leases that have a duration of less than one year) as of the date on which the lessor makes the underlying asset available to the lessee. For lessors, accounting for leases is substantially the same as in prior periods. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases, to clarify how to apply certain aspects of the new leases standard. ASU 2016-02, as subsequently amended for various technical issues, is effective for emerging growth companies following private company adoption dates in fiscal years beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022, and early adoption is permitted. If the Company were to cease meeting the emerging growth company criteria during the fiscal year ending January 31, 2022, this ASU would be effective for the Company for its Annual Report on Form 10-K for the fiscal year ended January 31, 2022. The Company is currently evaluating the impact of this standard to the Company's financial statements.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments–Credit Losses: Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for losses. ASU 2016-13, as subsequently amended for various technical issues, is effective for emerging growth companies following private company adoption dates for fiscal years beginning after December 15, 2022 and for interim periods within those fiscal years. If the Company were to cease meeting the emerging growth company criteria during the fiscal year ending January 31, 2022, this ASU would be effective for the Company for its Annual Report on Form 10-K for the fiscal year ended January 31, 2022. The Company is currently evaluating the impact of this standard to the Company's financial statements.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for emerging growth companies following private company adoption dates in fiscal years beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022, with early adoption permitted, including adoption in an interim period. If the Company were to cease meeting the emerging growth company criteria during the fiscal year ending January 31, 2022, this ASU would be effective for the Company for its Annual Report on Form 10-K for the fiscal year ended January 31, 2022. The Company is evaluating the effect of adopting this new accounting guidance, but does not expect adoption will have a material impact on the Company’s financial statements.
In October 2020, the FASB issued ASU 2020-10, Codification Improvements. The guidance includes amendments to improve the codification by ensuring that all guidance that requires or provides an option for an entity to provide information in the notes to the financial statements is codified in the disclosure section of the codification and to clarify guidance so that entities can apply guidance more consistently on codifications that are varied in nature where the original guidance may have been unclear. ASU 2020-10 is effective for emerging growth companies following private company adoption dates in fiscal years beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022, and early adoption is permitted. If the Company were to cease meeting the emerging growth company criteria during the fiscal year ending January 31, 2022, this ASU would be effective for the Company for its Annual Report on Form 10-K for the fiscal year ended January 31, 2022. The Company is evaluating the effect of adopting this new accounting guidance, but does not expect adoption will have a material impact on the Company’s financial statements.

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nCino, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts and unless otherwise indicated)
Note 3. Variable Interest Entity and Redeemable Non-Controlling Interest
In October 2019, the Company entered into an agreement with Japan Cloud Computing, L.P. and M30 LLC (collectively, the “Investors”) to engage in the investment, organization, management, and operation of nCino K.K. that is focused on the distribution of the Company’s products in Japan. In October 2019, the Company initially contributed $4.7 million in cash in exchange for 51% of the outstanding common stock of nCino K.K. As of October 31, 2020, the Company controls a majority of the outstanding common stock in nCino K.K.
All of the common stock held by the Investors is callable by the Company or puttable by the Investors at the option of the Investors or at the option of the Company beginning on the eighth anniversary of the agreement with the Investors. Should the call or put option be exercised, the redemption value would be determined based on a prescribed formula derived from the discrete revenues of nCino K.K. and the Company and may be settled, at the Company’s discretion, with Company stock or cash or a combination of the foregoing. As a result of the put right available to the Investors, the redeemable non-controlling interests in nCino K.K. are classified outside of permanent equity in the Company’s unaudited condensed consolidated balance sheets. The estimated redemption value of the call/put option embedded in the redeemable non-controlling interest was $0.3 million at October 31, 2020.
The following table summarizes the activity in the redeemable non-controlling interests for the period indicated below:
Three Months Ended
October 31,
Nine Months Ended
October 31,
2019202020192020
Balance, beginning of period$ $4,384 $ $4,356 
Investment by redeemable non-controlling interest4,513  4,513  
Net loss attributable to redeemable non-controlling interest(60)(292)(60)(700)
Foreign currency translation10 (2)10 167 
Adjustment to redeemable non-controlling interest 76  343 
Balance, end of period$4,463 $4,166 $4,463 $4,166 
Note 4. Fair Value of Financial Instruments
The Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:
Level 1. Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2. Significant other inputs that are directly or indirectly observable in the marketplace.
Level 3. Significant unobservable inputs which are supported by little or no market activity.
The carrying amounts of cash equivalents, accounts receivable and accounts payable approximate fair value as of January 31, 2020 and October 31, 2020 because of the relatively short duration of these instruments.
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nCino, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts and unless otherwise indicated)
The Company evaluated its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period. The following table summarizes the Company’s financial assets measured at fair value as of January 31, 2020 and October 31, 2020 and indicates the fair value hierarchy of the valuation:
Fair value measurements on a recurring basis as of January 31, 2020
Level 1Level 2Level 3
Assets:
Money market accounts (included in cash and cash equivalents)
$67,119 $ $ 
Total assets$67,119 $ $ 
Liabilities:
Contingent consideration (included in other long-term liabilities)
$ $ $195 
Total liabilities$ $ $195 
Fair value measurements on a recurring basis as of October 31, 2020
Level 1Level 2Level 3
Assets:
Money market accounts (included in cash and cash equivalents)
$349,482 $ $ 
Total assets$349,482 $ $ 
Liabilities:
Contingent consideration (included in other accrued expenses)
$ $ $204 
Total liabilities$ $ $204 
All of the Company’s money market accounts are classified within Level 1 because the Company’s money market accounts are valued using quoted market prices in active exchange markets including identical assets.
The Company added contingent consideration, a Level 3 measurement, on October 18, 2019 with the acquisition of FinSuite Pty Ltd ("FinSuite"). Changes in fair value of the contingent consideration are recorded in the unaudited condensed consolidated statements of operations within other income. The Company’s contingent consideration is valued using a probability weighted discounted cash flow analysis. A reconciliation of the balance for contingent consideration obligations for the three and nine months ended October 31, 2020 is as follows:
Three Months Ended
October 31,
Nine Months Ended
October 31,
2019202020192020
Balance, beginning of period$ $209 $ $195 
Acquisitions197  197  
Change in fair value    
Translation adjustments4 (5)4 9 
Balance, end of period$201 $204 $201 $204 

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nCino, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts and unless otherwise indicated
Note 5. Revenues
Revenues by Geographic Area
Revenues by geographic region were as follows:
Three Months Ended
October 31,
Nine Months Ended
October 31,
2019202020192020
United States$34,537 $47,635 $91,869 $132,155 
International3,325 6,594 7,807 15,551 
$37,862 $54,229 $99,676 $147,706 
Revenues by geography are determined based on the region of the Company’s contracting entity, which may be different than the region of the customer. No country outside the United States represented 10% or more of total revenues.
Contract Amounts
Accounts Receivable
Accounts receivable, less allowance for doubtful accounts, is as follows as of January 31, 2020 and October 31, 2020:
As of January 31,
2020
As of October 31,
2020
Trade accounts receivable$32,686 $23,679 
Unbilled accounts receivable1,425 1,792 
Allowance for doubtful accounts (342)
Other accounts receivable94 221 
Total accounts receivable, net$34,205 $25,350 
Deferred Revenue and Remaining Performance Obligation
Significant movements in the deferred revenue balance during the period consisted of increases due to payments received prior to transfer of control of the underlying performance obligations to the customer, which were offset by decreases due to revenues recognized in the period. During the nine months ended October 31, 2020, $53.8 million of revenues were recognized that were included in the balance of deferred revenue as of January 31, 2020.
Transaction price allocated to remaining performance obligations represents contracted revenues that have not yet been recognized, which includes deferred revenue and unbilled amounts that will be recognized as revenues in future periods. Transaction price allocated to the remaining performance obligation is influenced by several factors, including the timing of renewals, average contract terms and foreign currency exchange rates. The Company applies practical expedients to exclude amounts related to performance obligations that are billed and recognized as they are delivered, optional purchases that do not represent material rights, and any estimated amounts of variable consideration that are subject to constraint.
Remaining performance obligations were $452.9 million as of October 31, 2020. The Company expects to recognize approximately 66% of its remaining performance obligation as revenues in the next 24 months, approximately 31% more in the following 25 to 48 months, and the remainder thereafter.

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nCino, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts and unless otherwise indicated)
Note 6. Business Combinations
Visible Equity, LLC
On July 8, 2019, the Company acquired all outstanding membership interests of Visible Equity, LLC (“Visible Equity”) which provides financial analytics, portfolio management and compliance solutions to banks and credit unions. The Company acquired Visible Equity for its product offerings and the domain expertise of its employees. Visible Equity is headquartered in Salt Lake City, Utah.
The acquisition-date fair value of the consideration transferred is as follows:
Total
Consideration
Cash consideration to members$49,428 
Voting common stock issued (1,438,805 shares)
23,812 
Total consideration$73,240 
The transaction was accounted for using the acquisition method and, as a result, assets acquired and liabilities assumed were recorded at their estimated fair values at the acquisition date. Any excess consideration over the fair value of the assets acquired and liabilities assumed was recognized as goodwill. The measurement period ended one year from the acquisition date.
FinSuite Pty Ltd
On October 18, 2019, the Company, through its wholly-owned subsidiary, nCino APAC Pty Ltd, acquired all of the outstanding shares of FinSuite. The Company acquired FinSuite to enhance the Company’s data recognition capabilities, including of complex, unstructured data. FinSuite is headquartered in Melbourne, Australia.
The acquisition-date fair value of the consideration transferred is as follows:
Total
Consideration
Cash consideration to shareholders$3,928 
Cash consideration to settle debt137 
Voting common stock iss