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

FORM 10-Q
(Mark One)
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 2021
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 No.)
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 shareNCNOThe NASDAQ 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 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: 96,195,901 shares of common stock, $0.0005 par value per share, as of August 27, 2021.



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TABLE OF CONTENTS
Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.


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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.
i

Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
nCino, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
January 31, 2021July 31, 2021
(Unaudited)
Assets
Current assets
Cash and cash equivalents (VIE: $7,425 and $5,478 at January 31, 2021 and July 31, 2021, respectively)
$371,425 $399,363 
Accounts receivable, less allowance for doubtful accounts of $88 and $59 at January 31, 2021 and July 31, 2021, respectively
55,517 51,823 
Costs capitalized to obtain revenue contracts, current portion, net4,864 5,400 
Prepaid expenses and other current assets10,425 8,778 
Total current assets442,231 465,364 
Property and equipment, net29,943 41,111 
Operating lease right-of-use assets, net 11,028 
Costs capitalized to obtain revenue contracts, noncurrent, net10,191 11,369 
Goodwill57,149 56,740 
Intangible assets, net23,137 21,455 
Other long-term assets750 999 
Total assets$563,401 $608,066 
Liabilities, redeemable non-controlling interest, and stockholders’ equity
Current liabilities
Accounts payable$1,634 $3,875 
Accounts payable, related parties4,363 5,062 
Accrued commissions12,500 8,503 
Construction liability, current portion 9,755 
Other accrued expenses7,527 10,864 
Deferred rent, current portion203  
Deferred revenue, current portion89,141 116,033 
Financing obligation, current portion324 212 
Operating lease liabilities, current portion 2,685 
Total current liabilities115,692 156,989 
Operating lease liabilities, noncurrent  9,980 
Deferred income taxes, noncurrent368 586 
Deferred rent, noncurrent1,486  
Deferred revenue, noncurrent946 120 
Financing obligation, noncurrent15,939 15,956 
Construction liability, noncurrent 2,079 
Total liabilities134,431 185,710 
Commitments and contingencies (Notes 8, 12, and 13)
Redeemable non-controlling interest (Note 3)3,791 2,463 
Stockholders’ equity
Preferred stock, $0.001 par value; 10,000,000 shares authorized, and none issued and outstanding as of January 31, 2021 and July 31, 2021
  
Common stock, $0.0005 par value; 500,000,000 shares authorized as of January 31, 2021 and July 31, 2021; 93,643,759 and 95,927,741 shares issued and outstanding as of January 31, 2021 and July 31, 2021, respectively
47 48 
Additional paid-in capital585,956 610,166 
Accumulated other comprehensive income (loss)240 (259)
Accumulated deficit(161,064)(190,062)
Total stockholders’ equity425,179 419,893 
Total liabilities, redeemable non-controlling interest, and stockholders’ equity$563,401 $608,066 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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nCino, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended July 31,Six Months Ended July 31,
2020202120202021
Revenues
Subscription (related parties $0, $0, $2,439 and $0, respectively)
$39,351 $53,934 $74,182 $104,967 
Professional services9,414 12,585 19,295 23,907 
Total revenues48,765 66,519 93,477 128,874 
Cost of revenues
Subscription1 (related party $8,700, $11,151, $16,210 and $21,720, respectively)
11,920 15,308 22,019 30,254 
Professional services1
10,667 11,267 19,434 22,620 
Total cost of revenues22,587 26,575 41,453 52,874 
Gross profit26,178 39,944 52,024 76,000 
Operating expenses
Sales and marketing1
15,626 19,216 27,852 37,641 
Research and development1
15,292 18,609 26,257 36,034 
General and administrative1
10,953 15,287 17,879 30,967 
Total operating expenses41,871 53,112 71,988 104,642 
Loss from operations(15,693)(13,168)(19,964)(28,642)
Non-operating income (expense)
Interest income55 59 211 116 
Interest expense (330) (598)
Other income (expense), net1,117 (337)597 (70)
Loss before income tax expense(14,521)(13,776)(19,156)(29,194)
Income tax expense203 487 400 674 
Net loss(14,724)(14,263)(19,556)(29,868)
Net loss attributable to redeemable non-controlling interest (Note 3)(232)(403)(408)(870)
Adjustment attributable to redeemable non-controlling interest (Note 3)154 (177)267 (307)
Net loss attributable to nCino, Inc.$(14,646)$(13,683)$(19,415)$(28,691)
Net loss per share attributable to nCino, Inc.:
Basic and diluted$(0.17)$(0.14)$(0.23)$(0.30)
Weighted average number of common shares outstanding:
Basic and diluted84,629,777 95,661,756 83,112,132 95,042,448 
1Includes stock-based compensation expense as follows:
Three Months Ended July 31,Six Months Ended July 31,
2020202120202021
Cost of subscription revenues$242 $257 $303 $542 
Cost of professional services revenues2,282 1,340 2,548 2,672 
Sales and marketing3,346 1,977 3,661 3,730 
Research and development3,031 1,686 3,340 3,229 
General and administrative4,368 2,380 4,468 4,531 
Total stock-based compensation expense$13,269 $7,640 $14,320 $14,704 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2

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nCino, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)
Three Months Ended July 31,Six Months Ended July 31,
2020202120202021
Net loss$(14,724)$(14,263)$(19,556)$(29,868)
Other comprehensive income (loss):
Foreign currency translation467 (442)779 (650)
Other comprehensive income (loss)467 (442)779 (650)
Comprehensive loss(14,257)(14,705)(18,777)(30,518)
Less comprehensive loss attributable to redeemable non-controlling interest:
Net loss attributable to redeemable non-controlling interest(232)(403)(408)(870)
Foreign currency translation attributable to redeemable non-controlling interest78 (22)169 (151)
Comprehensive loss attributable to redeemable non-controlling interest(154)(425)(239)(1,021)
Comprehensive loss attributable to nCino, Inc.$(14,103)$(14,280)$(18,538)$(29,497)
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 July 31, 2020
Common StockVoting
Common Stock
Non-voting
Common Stock
Additional
Paid-in
Capital
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
SharesAmountSharesAmountSharesAmount
Balance, April 30, 2020 $ 75,651,808 $38 5,931,319 $3 $289,624 $(187)$(125,580)$163,898 
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 options500 — 269,729 — — — 739 — — 739 
Reclassification of voting and non-voting common stock
81,852,856 41 (75,921,537)(38)(5,931,319)(3)— — —  
Stock-based compensation— — — — — — 13,269 — — 13,269 
Other comprehensive loss— — — — — — — 389 — 389 
Net loss attributable to nCino, Inc., including adjustment to redeemable non-controlling interest
— — — — — — (154)— (14,492)(14,646)
Balance, July 31, 202091,122,356 $46  $  $ $567,314 $202 $(140,072)$427,490 
Three Months Ended July 31, 2021
Common StockAdditional
Paid-in
Capital
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
SharesAmount
Balance, April 30, 202195,318,070 $48 $601,034 $161 $(176,202)$425,041 
Exercise of stock options316,241 — 1,315 — — 1,315 
Stock issuance upon vesting of restricted stock units293,430 — — — — — 
Stock-based compensation— — 7,640 — — 7,640 
Other comprehensive loss— — — (420)— (420)
Net loss attributable to nCino, Inc., including adjustment to redeemable non-controlling interest
— — 177 — (13,860)(13,683)
Balance, July 31, 202195,927,741 $48 $610,166 $(259)$(190,062)$419,893 
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)
Six Months Ended July 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 options500 — 325,530 — — — 861 — — 861 
Reclassification of voting and non-voting common stock
81,852,856 41 (75,921,537)(38)(5,931,319)(3)— — —  
Stock-based compensation— — — — — — 14,320 — — 14,320 
Other comprehensive income— — — — — — — 610 — 610 
Net loss attributable to nCino, Inc., including adjustment to redeemable non-controlling interest
— — — — — — (267)— (19,148)(19,415)
Balance, July 31, 202091,122,356 $46  $  $ $567,314 $202 $(140,072)$427,490 
Six Months Ended July 31, 2021
Common StockAdditional
Paid-in
Capital
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
SharesAmount
Balance, January 31, 202193,643,759 $47 $585,956 $240 $(161,064)$425,179 
Exercise of stock options1,967,584 1 9,199 — — 9,200 
Stock issuance upon vesting of restricted stock units316,398 — — — — — 
Stock-based compensation— — 14,704 — — 14,704 
Other comprehensive income— — — (499)— (499)
Net loss attributable to nCino, Inc., including adjustment to redeemable non-controlling interest
— — 307 — (28,998)(28,691)
Balance, July 31, 202195,927,741 $48 $610,166 $(259)$(190,062)$419,893 
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)
Six Months Ended July 31,
20202021
Cash flows from operating activities
Net loss attributable to nCino, Inc.$(19,415)$(28,691)
Net loss and adjustment attributable to redeemable non-controlling interest(141)(1,177)
Net loss(19,556)(29,868)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization3,500 4,106 
Non-cash operating lease costs 1,224 
Amortization of costs capitalized to obtain revenue contracts2,430 2,712 
Stock-based compensation14,320 14,704 
Deferred income taxes40 221 
Provision for (recovery of) bad debt619 (5)
Net foreign currency (gains) losses 245 
Change in operating assets and liabilities:
Accounts receivable3,365 3,787 
Accounts receivable, related parties9,201  
Costs capitalized to obtain revenue contracts(3,615)(4,416)
Prepaid expenses and other assets(13)1,715 
Accounts payable and accrued expenses and other liabilities(4,115)1,026 
Accounts payable, related parties620 699 
Deferred rent(65) 
Deferred revenue33,188 26,023 
Deferred revenue, related parties(8,013) 
Operating lease liabilities (1,274)
Net cash provided by operating activities31,906 20,899 
Cash flows from investing activities
Purchases of property and equipment(2,936)(1,272)
Net cash used in investing activities(2,936)(1,272)
Cash flows from financing activities
Proceeds from initial public offering, net of underwriting discounts and commissions268,375  
Payments of costs related to initial public offering(1,345) 
Exercise of stock options861 9,200 
Principal payments on financing obligation (95)
Net cash provided by financing activities267,891 9,105 
Effect of foreign currency exchange rate changes on cash, cash equivalents, and restricted cash146 (466)
Net increase in cash, cash equivalents, and restricted cash297,007 28,266 
Cash and cash equivalents, beginning of period91,184 371,425 
Cash, cash equivalents, and restricted cash, end of period$388,191 $399,691 
Cash, cash equivalents, and restricted cash, end of period:
Cash and cash equivalents$388,191 $399,363 
Restricted cash included in other long-term assets 328 
Total cash, cash equivalents, and restricted cash, end of period$388,191 $399,691 
Supplemental disclosure of cash flow information
Cash paid during the year for taxes, net of refunds$236 $117 
Cash paid during the year for interest$ $598 
Supplemental disclosure of noncash investing and financing activities
Purchase of property and equipment, accrued but not paid$86 $12,379 
Costs related to initial public offering, accrued but not paid$1,420 $ 
Costs related to initial public offering, reclassified from other long term assets to equity$1,769 $ 
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.
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 Securities Exchange Commission ("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 in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2021 filed with the SEC on March 31, 2021. 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 Company is the primary beneficiary. All intercompany accounts and transactions are eliminated. See the variable interest entity section below and Note 3 "Variable Interest Entity and Redeemable Non-Controlling Interest" 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 2022 or any future period.
In March 2021, a Certificate of Amendment was filed with the state of Delaware for Visible Equity, LLC ("Visible Equity"), a wholly-owned subsidiary of the Company, to change its name to nCino Portfolio Analytics, LLC. The state of Delaware effected the name change in April 2021.
Effective February 1, 2021, the Company adopted the requirement of Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842) using the alternative transition method. Under this method, the Company is not required to restate or disclose the effects of applying this ASU for comparative periods. See the Recently Adopted Accounting Guidance section for the adoption of ASU 2016-02, Leases (Topic 842).
Variable Interest Entity: The Company holds an interest in a Japanese company (“nCino K.K.”) that is considered a variable interest entity ("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

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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)
significant to the Company’s consolidated financial statements except for cash which is reflected on the unaudited condensed consolidated balance sheets. See Note 3 "Variable Interest Entity and Redeemable Non-Controlling Interest" 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, cash equivalents and restricted cash. The Company’s cash and cash equivalents exceeded the Federal deposit insurance limit at January 31, 2021 and July 31, 2021. The Company maintains its cash, cash equivalents and restricted cash with high-credit-quality financial institutions.
As of January 31, 2021 and July 31, 2021, no individual customer represented more than 10% of accounts receivable and two customers represented 24% and 12%, respectively. For the three and six months ended July 31, 2020 and 2021, no individual customer represented more than 10% of the Company’s total revenues.
Restricted Cash: Restricted cash consists of deposits held as collateral for the Company's bank guarantees issued in place of security deposits for certain property leases.
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, which includes allowances for doubtful accounts and a reserve for expected credit losses.

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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 records allowances for doubtful accounts based upon the credit worthiness of customers, historical experience, the age of the accounts receivable, current market and economic conditions, and supportable forecasts about the future. Relevant risk characteristics include customer size and historical loss patterns. See the Recently Adopted Accounting Guidance section for the adoption of ASU 2016-13, Financial Instruments–Credit Losses: Measurement of Credit Losses on Financial Instruments.
A summary of activity in the allowance for doubtful accounts is as follows:
Three Months Ended July 31,Six Months Ended July 31,
2020202120202021
Balance, beginning of period$167 $52 $ $88 
Charged to (recovery of) bad debt expense452 7 619 (5)
Charged to (recovery of) deferred revenue   (24)
Translation adjustments3  3  
Balance, end of period$622 $59 $622 $59 
Leases: The Company determines if an arrangement is or contains a lease at inception date based on whether there is an identified asset and whether the Company controls the use of the identified asset throughout the period of use. The Company determines the classification of the lease, whether operating or financing, at the lease commencement date, which is the date the leased assets are made available for use. The Company accounts for lease and non-lease components as a single lease component for its facilities and equipment leases. The Company did not have any finance leases as of July 31, 2021.
Operating lease right-of-use ("ROU") assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The lease term reflects the noncancelable period of the lease together with options to extend or terminate the lease when it is reasonably certain the Company will exercise such option. Variable costs, such as common area maintenance costs, are not included in the measurement of the ROU assets and lease liabilities, but are expensed as incurred. The Company's leases do not generally provide an implicit rate; therefore, the Company uses its incremental borrowing rate in determining the present value of the lease payments. Lease expense is recognized on a straight-line basis over the lease term.
The Company does not recognize ROU assets or lease liabilities for leases with a term of 12 months or less. Lease expense for such leases is recognized on a straight-line basis over the lease term.
Recently Adopted Accounting Guidance: 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. Since the Company will cease to qualify as an emerging growth company as of January 31, 2022, the Company adopted this ASU effective February 1, 2021.
The Company used the alternative transition method in which the Company is not required to restate or disclose the effects of applying this ASU for comparative periods. The Company elected the package of practical expedients which permits the Company to not reassess prior conclusions pertaining to lease identification, lease classification, and initial direct costs. The Company did not elect the use-of-hindsight or the practical expedient pertaining to land easements. In addition, the Company elected ongoing practical expedients including the option to not recognize right-of-use assets and lease liabilities for short term

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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)
leases (leases with an original term of twelve months or less). The Company also elected the practical expedient to not separate lease and non-lease components for our facilities and equipment leases.
The adoption of this ASU resulted in the recognition of operating right-of-use assets of $10.5 million and lease liabilities of $12.2 million, and the derecognition of deferred rent on the Company's unaudited condensed consolidated balance sheet on February 1, 2021. The adoption of this ASU did not impact the Company's unaudited condensed consolidated statements of operations, comprehensive loss or the unaudited condensed consolidated statements of cash flows. Upon the adoption of this ASU there was no change to the accounting for the Company's financing obligation.
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. Since the Company will cease to qualify as an emerging growth company as of January 31, 2022, the Company adopted this ASU effective February 1, 2021. The adoption of this ASU, which impacted the Company's allowance for doubtful accounts, did not have a material impact on the Company's unaudited condensed consolidated 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. Since the Company will cease to qualify as an emerging growth company as of January 31, 2022, the Company adopted this ASU effective February 1, 2021. The adoption of this ASU did not have a material impact on the Company’s unaudited condensed consolidated 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. Since the Company will cease to qualify as an emerging growth company as of January 31, 2022, the Company adopted this ASU effective February 1, 2021. The adoption of this ASU did not have a material impact on the Company’s unaudited condensed consolidated financial statements.
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 July 31, 2021, 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

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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)
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 $0.1 million at July 31, 2021.
The following table summarizes the activity in the redeemable non-controlling interests for the period indicated below:
Three Months Ended July 31,Six Months Ended July 31,
2020202120202021
Balance, beginning of period$4,384 $3,065 $4,356 $3,791 
Net loss attributable to redeemable non-controlling interest (excluding adjustment to non-controlling interest)(232)(403)(408)(870)
Foreign currency translation78 (22)169 (151)
Adjustment to redeemable non-controlling interest154 (177)267 (307)
Balance, end of period$4,384 $2,463 $4,384 $2,463 
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, accounts payable and accrued expenses approximate fair value as of January 31, 2021 and July 31, 2021 because of the relatively short duration of these instruments.
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, 2021 and July 31, 2021 and indicates the fair value hierarchy of the valuation:
Fair value measurements on a recurring basis as of January 31, 2021
Level 1Level 2Level 3
Assets:
Money market accounts (included in cash and cash equivalents)
$332,541 $ $ 
Total assets$332,541 $ $ 
Fair value measurements on a recurring basis as of July 31, 2021
Level 1Level 2Level 3
Assets:
Money market accounts (included in cash and cash equivalents)
$355,455 $ $ 
Time deposits (included in other long-term assets)328   
Total assets$355,783 $ $ 

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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)
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.
Note 5. Revenues
Revenues by Geographic Area
Revenues by geographic region were as follows:
Three Months Ended July 31,Six Months Ended July 31,
2020202120202021
United States$44,049 $55,706 $84,520 $109,032 
International4,716 10,813 8,957 19,842 
$48,765 $66,519 $93,477 $128,874 
The Company disaggregates its revenues from contracts with customers by geographic location. 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, 2021 and July 31, 2021:
As of January 31, 2021As of July 31, 2021
Trade accounts receivable$53,272 $49,771 
Unbilled accounts receivable1,814 1,642 
Allowance for doubtful accounts(88)(59)
Other accounts receivable519 469 
Total accounts receivable, net$55,517 $51,823 
Deferred Revenue and Remaining Performance Obligation
Significant movements in the deferred revenue balance during the period consisted of increases due to payments received or due in advance prior to the 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 six months ended July 31, 2021, $64.2 million of revenues were recognized out of the deferred revenue balance as of January 31, 2021.
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 $706.9 million as of July 31, 2021. The Company expects to recognize approximately 57% of its remaining performance obligation as revenues in the next 24 months, approximately 33% 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. Property and Equipment
Property and equipment, net consisted of the following:
As of January 31, 2021As of July 31, 2021
Furniture and fixtures$6,706 $6,874 
Computers and equipment5,039 5,656 
Buildings and land16,300 16,300 
Leasehold improvements11,581 11,603 
Construction in progress277 12,927 
39,903 53,360 
Less accumulated depreciation(9,960)(12,249)
$29,943 $41,111 
The Company recognized depreciation expense as follows:
Three Months Ended July 31,Six Months Ended July 31,
2020202120202021
Cost of revenues$302 $352 $589 $737 
Sales and marketing246 288 513 597 
Research and development300 414 580 846 
General and administrative113 147 226 302 
Total depreciation expense$961 $1,201 $1,908 $2,482 
The increase in construction in progress is primarily due to construction for a parking deck and an additional office building that is on the property of our existing headquarters for which we are considered the owners of for accounting purposes. See Note 12 "Commitments and Contingencies" for additional details including future commitments.
Note 7. Goodwill and Intangible Assets
Goodwill
The change in the carrying amounts of goodwill was as follows:
Three Months Ended July 31,Six Months Ended July 31,
2020202120202021
Balance, beginning of period$55,630 $57,325 $55,840 $57,149 
Translation adjustments897 (585)687 (409)
Balance, end of period$56,527